3 Different Versions of “SOLD” in Real Estate

By
Real Estate Sales Representative

3 Different Versions of “SOLD” in Ontario Real Estate

& Their Respective Roles in Home Price Trend Statistics

 

When Does SOLD men SOLD in Ontario?
When is a Sale a Sale?

  

Image_When does SOLD Mean Sold?

 

 

In Ontario, there are 3 different times, in a real estate transaction, when the term “SOLD” is used.

 

Distinction between the 3 is extremely important to both the parties to the transaction, and in the interpretation of sales statistics.

 

Version 1:        Sold ConditionalSOLD image

 

Sold Conditional occurs in a transaction when an offer, containing conditions, is accepted and the Buyer pays the agreed amount of Deposit (usually to the Listing Agent in trust).

In a residential transaction the conditions inevitably favour the Buyer.

 

Examples include:

·      Subject to the Buyer obtaining finance on terms acceptable to the Buyer

 

·      Subject to the Buyer obtaining a Building Inspection Report satisfactory to the Buyer

 

·   Subject to the Buyer obtaining home insurance on the property on terms acceptable to the Buyer

 

·      Where the property is a condominium, subject to the Buyer obtaining,  from the Manager of the Condominium Corporation, a Status Certificate & Attachments, satisfactory to the Buyer’s Lawyer

 

·    Where the water supply is from a well, subject to the Buyer obtaining a report, satisfactory to the Buyer, to the effect that the water is of adequate quality and quantity

 

·      Where the property has a septic tank for the disposal of sewage, subject to the Buyer obtaining a report, satisfactory to the Buyer, on the condition of the septic system

 

The relevant clauses usually include a provision that, unless the Buyer gives notice, within a specified period, that the condition has been fulfilled, the Agreement will be at an end and the deposit will be refunded to the Buyer without deduction.

 

When an offer, with conditions such as these, is accepted the property is “Sold Conditional”. The relevant purchase price is not reported.

 

The result is that Sold Conditional is really only an option in favour of the Buyer who can let any one of the various conditional periods expire and the Agreement will be at an end; i.e. no sale.

 

It should also be noted that, during these conditional periods, the Seller is bound by the Agreement and cannot sell to another Buyer.

 

If the Agreement ends because the Buyer does not give Notice of Fulfillment for each of the conditions, or does not waive the condition, within the specified period, the property usually goes back onto the market.

  

Because of the uncertainty involved in a Sold Conditional, and because the selling price is not reported, Sold Conditionals are not taken into account in statistical reporting of homes sold.

 

 

Version 2:   Sold FirmSOLD image

 

A sale becomes Sold Firm when:

1.       a Sold Conditional has all of its conditions fulfilled, or waived; or

2.       an offer to purchase is accepted without conditions

 

At this time the Agreement becomes unconditionally binding on both the Buyer and the Seller.

 

This is when:

ü the “SOLD” sign goes up on the property

 

ü the Agreements are forwarded to the respective lawyers for the Buyer and Seller

 

ü the lawyers take the steps necessary to prepare for the closing – see Version 3, Closed Sale

 

ü the sale becomes one of the “solds” that make up the statistics published by the relevant real estate board.

 

 

Version 3:   Closed SaleSOLD image

 

Closing is the time when the Buyer, with the contribution from the Mortgage Loan Provider, pays the balance of the purchase price (after allowing for the deposit already padi) to Discharge the Seller’s Mortgage and to pay the remainder to the Seller.

 

Transfer of title to the property and Discharge of the Seller’s Mortgage are delivered to the Buyer.

Transfer of title to the Buyer, Discharge of the Seller’s Mortgage and the Mortgage from the Buyer to the new Lender are immediately lodged with the Titles Office for registration.

 

Once all the relevant documents are registered at the Titles Office, it is a Closed Sale.

However, despite the fact that the Agreement is binding on both the Buyer and Seller there are still circumstances where the sale may not close:

 

·      There may be something wrong with the Seller’s title to the property

 

·      There may be Mortgage Debt combined with Liens on the property that exceed the purchase price so that there will be insufficient funds from the sale to enable the Liens to be removed and for the existing Mortgage to be discharged

 

·      There may be disputes about a number things that may lead to the sale not closing

 

Statistical Reporting of Sales and Sale Prices

When it comes to reporting statistical information about sales of certain types of property, in specific areas, during a particular time period, reporting organizations use Sold Firm information.

 

This is despite the fact that the only totally accurate statistics would be based on Closed Sales. This is on the basis that all Sold Firms may not close.

This can be important when reporting average sale prices.

 

When Sold Firms are used, if there are not many sales for the period, the average can be skewed up by a high price sale that does not close. Similarly, the average can be skewed down by a low price sale that does not close.

 

If the statistics were based on Closed Sales instead of Firm Sales, the figures would be more accurate.

  

However, the disadvantage of using Closed Sales is that the information is out of date.

 

This is because Sold Firm sales provide for a specific date for closing and that date is often 60 days after the sale becomes Firm.

 

This, in turn, means that a Sold Firm sale in, say October, may not close until December, or later.

 

October Firm Sales can be reported in early November whereas the same sale, if it closes in December, will not appear in Closed Sale statistics until January – 2 months later.

 

In circumstances where the market is moving quickly, up or down, Closed Sale reports may be far too late to show the current trends.

 

On balance, the accepted process is to use Sold Firm in statistical reporting.

 

It is deemed more important to have information that more accurately reflects current trends (Sold Firm) rather than total accuracy (Closed Sale) in view of the fact that it is fairly rare for a Sold Firm not to close

 

For photos and details of homes currently for sale in South Durham Region of OntarioHome Search image

 

You can also arrange to be notified when Oshawa homes, that meet your criteria, come onto the market.

 

These services are available to you without obligation.

 

If you are thinking of selling, you can also search on my website for homes, similar to yours, that would be competition for your home, if you list it for sale.

 

Obtain an indication of the market value of your home.

 

 

For answers to your questions, email me; or call 905-723-5944.

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