SELLER'S GUIDE

Selling a home in the U.S. involves a lot more than a “For Sale” sign on the front lawn, especially as a Canadian. It requires careful planning and the expert advice and guidance of real estate professionals who specialize in cross-border transactions.

Whether you're a first-time or experienced Seller, our Seller’s Guide simplifies selling a home in the U.S. From strategically pricing your property, to successfully closing the deal, we break down the essential steps involved in the selling process so that you can make informed and confident real estate decisions.

STEP #1
DECIDING TO SELL

When deciding to sell your U.S. property as a Canadian resident, it’s important to fully understand the many tax implications, reporting requirements, legal considerations, and financial obligations that apply.

Due diligence is vital. Before you list, speak with an experienced Cross-Border Tax Accountant and a Real Estate Lawyer to ensure you’re aware of your responsibilities, and to develop a strategy to minimize your tax liabilities and any potential legal complications.

In real estate, timing is everything. While every homeowner hopes to sell during a hot “Seller’s Market”, their decision to list is usually driven by financial need or a significant life event, not market conditions. Being clear about your motivation for selling, your financial status, and your short and long-term plans, will help you determine the right time to sell.

Personal need or circumstances may create the need to sell your home, but to optimize the financial outcome of your home sale, you’ll need to consider the following:

Market Conditions: How much housing inventory is for sale in your neighbourhood? Has a new tax or government regulation or restriction been placed on local homeowners? Are there any major population, employment, or infrastructure changes happening in the area?

Economic Factors: What are the current interest rates? What is the inflation rate? How is consumer confidence? Is it an election year? What are the local and federal unemployment rates?

Property Condition and Characteristics: What's your home's current state of repair? Has it been well maintained? Does your home have any unique features, upgrades or amenities?

Neighbourhood: What is your neighbourhood's reputation? Is it safe? Does it have a positive community feel? Is your home in a good school district? What is your home's proximity to amenities?

Time of Year: Real estate sales in the Greater Palm Springs are subject to seasonally. The Spring has historically been the best time to list, whereas the winter and late summer months have been historically slow.

As a Canadian, successfully navigating the sale of your U.S. property requires a proactive and informed approach. By thoroughly researching the tax and legal requirements, aligning your sale with personal and market realities, and meticulously analyzing the many factors that influence value, you'll position yourself for a financially sound and seamless transaction.

STEP #2
SELECTING A REALTOR

Selling a home is a substantial undertaking. To guide you through the process, it helps to have an expert in your corner. Partnering with a licensed, local REALTOR® is key to a successful and profitable sale.

REALTORS® have a fiduciary duty to promote and protect their client’s best interests. They exercise skill and care; provide sound, educated advice; perform comprehensive due diligence; and negotiate on behalf of their clients to secure the best deal.

For Canadians selling a U.S. property, working with an experienced, cross-border REALTOR® like California Homes for Canadians can provide invaluable assistance when navigating the specific complexities of international real estate transactions. Our Canadian-born REALTORS® are uniquely equipped to understand your questions and concerns.

Your REALTOR® should be someone with whom you have a good rapport, who is a trusted partner that fosters open communication, instills confidence, and ultimately has the skill and determination needed to sell your home successfully. They should be knowledgeable about the local real estate market, understand how to accurately assess your home’s value, and be able to market it effectively to obtain the highest value.

When working with a REALTOR®, you also benefit from their extensive client network, and their relationships with established third-party service providers including Mortgage Brokers, Escrow and Title Insurance Companies, Home Inspectors, Lawyers, Accountants, Contactors, and other home service professionals.

Sellers who exclusively list with California Homes for Canadians receive:

Professional Real Estate Advice and Guidance
Comparative Market Analysis and Evaluation
Property Preparation and Staging Consultation
Personalized Marketing Plan
- Professional Photography and Home Tour Video
- Customized Feature Sheets and Brochure
- MLS® Listing
- Comprehensive Email, Digital and Social Media Marketing
- Open House and Agent Tour
- Professional Copywriting
- "For Sale" Signage
Expert Negotiation
Appointment Scheduling
Flawless Paperwork
Electronic Signing
Concierge Services

REALTOR COMMISSION

REALTOR® in the U.S. receive a commission for service, paid upon the successful completion of a sale. If the property doesn’t sell, the REALTOR® doesn’t get paid. Historically, the Seller has been responsible for the real estate commission payable on a transaction, but due to recent changes to U.S. real estate regulations, consumers are starting to see a shift in this responsibility. Who pays the REALTORS®' commission, like the amount of the commission paid, is always negotiable.

REALTOR® commission amounts are typically a percentage of the sale price, a flat fee, or a combination of both, that is split between the Listing Broker who represents the Seller and the Selling Broker (Cooperating Brokerage in Canada) who represents the Buyer. There is no fixed real estate commission amount in California

STEP #3
PREPARING YOUR HOME

Your home only has one chance to make a good first impression. Are you ready?

Thanks to the popularity of home renovation and interior design shows, modern Homebuyers are more knowledgeable and discerning than ever. From the moment a potential Buyer pulls up to the curb, they’re forming their opinion of your home. Beyond the number of bedrooms and square footage, these Buyers are influenced by the feeling the home evokes. The flow of the space, the quality of the finishes, the availability of natural light, and the overall sense of care and maintenance, all play a role in their appraisal.

To enhance your home's appeal, start with inexpensive yet impactful measures like a fresh coat of paint to brighten the space, decluttering to create spaciousness, thoughtful furniture placement to showcase flow, and a thorough deep clean to create a welcoming environment. For more substantial improvements consider updating older appliances and remodeling key areas like the kitchen and bathrooms. Renovations and upgrades are often major selling points, attracting higher offers and facilitating quicker sales. However, evaluate these investments wisely, careful to weigh the potential return in relation to the upfront cost. Overspending on renovations that don't align with the rest of the home, the neighbourhood, or the expectations of potential Buyers can result in diminishing returns.

At California Homes for Canadians, we also strongly recommend a Pre-List Home Inspection. This proactive step can help identify any property defects that you can repair or remediate before your home goes on the market. An ounce of prevention is worth a pound of cure. The majority of Residential Purchase Agreements will include a home inspection contingency. If the inspection uncovers deficiencies, the Buyer will have the option to request repairs or a credit to the purchase price, or they can cancel the contract.

When selling a property in the U.S., most Sellers will be required to complete a range of disclosures that are essential for a fair and informed transaction. Before listing your home, we encourage Sellers to complete these mandatory disclosures to help streamline the sales process and reduce the likelihood of delays or cancellations during escrow.

PRE-LIST DISCLOSURES

REAL ESTATE TRANSFER DISCLOSURE STATEMENT (TDS)

Similar to the Seller Property Info Statement (SPIS) required in many Canadian provinces when selling a property, the Real Estate Transfer Disclosure Statement (TDS) is a comprehensive disclosure that details a property's condition and any issues that could affect its value or desirability. Included in the TDS is information about the home’s structural components (foundation, roof, windows, and walls); its electrical, heating, air conditioning, and plumbing systems; the appliances included in the sale; environmental hazards (asbestos, lead paint, mold, or radon gas); and any other material defects on the property known to the Seller. The TDS is generally required for the sale or transfer of real property consisting of one to four dwelling units, although some exemptions apply. It must be completed accurately and honestly based on the Seller’s current knowledge. Failure to disclose any known material defects can result in legal consequences.

SELLER PROPERTY QUESTIONNARIE (SPQ)

Not to be confused with the Real Estate Transfer Disclosure Statement (TDS), the Seller Property Questionnaire offers potential Buyers more detailed property information than what is required in the TDS, including past repairs, legal and title issues, neighbourhood concerns, inspection reports, and warranties.

NATURAL HAZARD DISCLOSURE STATEMENT (NHD)

In California, Sellers have a legal obligation to inform prospective Buyers about potential natural hazards that may affect the property, including earthquakes, floods, wildfires, or other natural disasters. The Natural Hazard Disclosure Statement protects both the Seller and Buyer by making them aware of potential risks that could impact the property's safety, insurability, and value.

LEAD-BASED PAINT DISCLOSURE

Sellers of residential property built before 1978 have a legal obligation to disclose to prospective Buyers the presence of any known lead-based paint or lead-based paint hazards on the premises, and share results of past inspections or reports, if available. Sellers are also required to provide the Environmental Protection Agency’s Protect Your Family from Lead in Your Home pamphlet, informing Buyers about the risks of lead-based paint and how to protect their family.

MELLO-ROOS COMMUNITY FACILITES DISTRICT DISCLOSURE

Sellers of property located within a designated Community Facilities District (CFD) are required to provide potential Buyers with a Mello-Roos Community Facilities District Disclosure. The Disclosure details any special tax assessments, including Mello-Roos taxes and those levied under the 1915 Act (Improvement Bond Act), that are added to property tax bills to fund public infrastructure and services within the CFD.

Your REALTOR® will also conduct a visual inspection of your property before it’s listed for sale to document any obvious visible defects or issues. The findings from this inspection are documented in the Agent Visual Inspection Disclosure (AVID) and disclosed as material facts to potential Buyers.

By proactively addressing repairs and giving your home a refresh, you can create an unforgettable first impression that leads to a quick and profitable sale. Check out your Home Preparation Checklist for helpful tips on getting your home market ready.

HOME PREPARATION CHECKLIST

Make a List of Renovations and Repairs: From the small jobs to the big, prepare a timeline for completion and hire professionals where needed.

Clean Everything and Clean Often: Buyers don’t just look at surfaces; they’ll look inside your closets, your stove, and the bathroom vanity. The cleaner your house, the faster it will sell!

Depersonalize: Remove personal objects like pictures, collectibles and books, and trendy décor items. The goal is to help Buyers imagine themselves living in your house.

Declutter, Then Declutter Some More: Cluttered homes look smaller and create more surfaces for dust. Remove large or unnecessary pieces of furniture and household items.

Clean Out Your Closets, Attic, and Garage: Donate items you don’t use and call a junk removal company for large refuse.

Protect Your Valuables: Lock away or remove from your home: jewellery; cash and bonds; valuable art and objects; laptops, cellphones, and tablets; expensive clothing and handbags; and cherished personal mementos.

Optimize Room Usage: Many Buyers don’t have a great imagination. If there is a room that could be used as an extra bedroom, put a bed in it. If there's potential for an office, place a desk in that space. Consider hiring a professional Home Stager to help uncover the full potential of your home.

Don’t Forget About Curb Appeal: Keep your landscaping well maintained. Mend fencing, re-stain the deck, clean the patio furniture, and update the garden with colourful annuals. If you’re selling your home in the winter, provide your REALTOR® with photos of your yard in the summer.

The Truth About Pets: As much as you love your pet, they won’t help sell your home. The signs and smells of an animal will impact the opinion of potential Buyers. If it’s not feasible to remove your pet while your home is on the market, maintain a rigorous cleaning schedule and daily odor control.

Gather Your Documents: Provide your REALTOR® with copies of your utility and tax bills; permits and receipts from any renovations; equipment rental agreements; and appliance and equipment warranties and manuals.

Get an Extra Set of Keys: Your REALTOR® will require a set of keys for the showings.

Set the Mood: Don’t forget the little details. Turn the lights on in each room. Open the blinds and drapes to let in as much light as possible. Keep the air conditioning on in the summer months and the furnace or a fireplace on in the winter. Decorate with new houseplants and fresh flowers, and invest in air fresheners.

STEP #4
PRICING YOUR HOME

You might be surprised to learn that neither you nor your REALTOR® determines what your home is worth. The only true authority on your home’s value is the market. The real estate market is based on supply and demand: how many homes are for sale versus the demand for those homes. While the supply side is relatively simple to measure, demand is much more complex to predict. When more homes are listed for sale and more homes are being built, the result is greater supply. When more Buyers are looking to purchase due to positive economic conditions, low interest rates, or an increase in a community’s population, greater demand occurs. A reverse of these factors results in lower demand.

Navigating these ever-changing market conditions is where a skilled, local REALTOR® is invaluable. With a deep understanding of regional real estate trends and exclusive access to comprehensive MLS® market data, your REALTOR® will help you interpret and capitalize on economic dynamics so you can strategically price your home to get the most out of your investment.

Not all houses will sell for the asking price or achieve the multiple offers that many Sellers expect. Set realistic expectations. Remember, your property is only worth what someone is willing to pay for it. The goal of pricing your property is to generate as much interest as possible from qualified Buyers. Overvaluing your home will scare off potential purchasers, and if the property sits on the market too long, interested Buyers may question its value and move on. It’s critical to have an open and honest conversation with your REALTOR® before and during the listing process to ensure you’re both on the same page about your expectations and market realities.

Factors That Influence Housing Prices:

Location of Property: What is the community’s impression of your neighbourhood? Is it safe? Does it have easy access to amenities, services, and transportation routes?

Home and Lot Size: What is the home's usable square footage? How many bedrooms and bathrooms are there? How large is the lot size?

Age and Condition of Home: Has the property been well maintained? Have there been any recent upgrades, repairs, and renovations? Is the style of the home desirable in the current market?

Property Amenities: Does the home offer popular features like a gourmet kitchen, ensuite bathrooms, walk-in closets, a fireplace, attached garage, outdoor living space, in-ground pool, and smart technology?

Property History & Disclosures: Are there any significant property issues or repairs that require disclosure? Any major damage, mold, pest infestations, death or violent crime on the property, or unpermitted work?

Housing Supply: Is there a limited supply or a surplus number of homes for sale in your area? Is there any new home construction planned in your neighbourhood?

Financing Options and Interest Rates: Have mortgage lending rules changed? Have interest rates increased or decreased recently, and where are they trending?

State of the National Economy: What is the overall health of the national economy? Is there high consumer confidence?

Local Economy: Is there strong job growth and low unemployment in your community? Does your area have higher than average property taxes, utility costs, and other homeowner fees? Are there any new infrastructure or public works planned for your region?

Population and Demographics: Is the local population growing or diminishing? What is the average household income of the current population? Does your home meet the needs of the local demographic?

Housing Regulations and Restrictions: Is your home on a land lease? Is it part of an HOA? What are the zoning restrictions in your area?

Investment Potential: Does your community allow short-term rentals? Are there any restrictions Investors may face renting this property? What is the average monthly rental income for your property?

STEP #5
MARKETING YOUR HOME

In today’s competitive real estate market, getting top dollar for your home requires a personalized marketing strategy that guarantees maximum exposure. At California Homes for Canadians, we work with our clients to craft a marketing plan that ensures your home stands out from the competition. We actively pursue potential Buyers, both locally and internationally, to drive demand and solicit competitive offers.

Our Complimentary Marketing Services:

STAGING CONSULTATION

Staged homes sell up to 73% faster than an unstaged home and can increase the sale price by an average of 5-10%. At California Homes for Canadians, we provide clients with a free property inspection and staging consultation, and if you decide to stage your home, we have a trusted network of Stagers and service providers, including Handymen, Cleaners, and Landscapers to help you prepare for the sale.

PROFESSIONAL
PHOTOGRAPHY

Engaging, professional photographs of your property are not a suggestion; they are a requirement of any successful listing. Research estimates that 97% of Homebuyers begin their property search online. If your photos don’t capture a potential Buyer’s attention when scrolling online, they won’t book a showing. The need for professional photography in the plan to sell your home cannot be overstated.

VIRTUAL TOUR

Virtual tours have quickly become a very necessary marketing tool and safety measure. They bring your home’s unique features to life, increasing the likelihood a Buyer will schedule a showing. Virtual tours also alleviate the need for a Buyer to be physically present during a showing, an important consideration for individuals with health and mobility issues, and most International Buyers.

DIGITAL MARKETING

Given that most Homebuyers search for property online, an effective online marketing campaign for your home is crucial. Our digital and social media marketing campaigns utilize Google Ads, Facebook, Instagram, and numerous online listing portals to reach thousands of potential Buyers each day.

EMAIL MARKETING

Harnessing the power of California Homes for Canadians’ personal network of clients and real estate professionals, along with the limitless reach of the RE/MAX brand, we can deliver your property listing into the personal inbox of potential Buyers with the click of a button.

PRINT MARKETING

Every listing will receive customized feature sheets and property brochures with vivid color photos, property details, and neighborhood information, and if appropriate, we'll announce your new listing to local neighbours using our "Just Listed" cards.

PROFESSIONAL COPYWRITING

In a crowded listing marketplace, our professional property descriptions stand out. We utilize rich narratives to tell the unique story of your home and craft evocative language that resonates emotionally with potential Buyers, making your property truly memorable.

MLS® LISTING

The Multiple Listing Service® (MLS®) is the central database used by REALTORS® to share property information with other Agents and the public. Listing your home on the MLS® is fundamental to reaching the widest pool of potential Buyers. MLS® listings are syndicated to countless prominent real estate websites like Realtor.com, Zillow, Redfin, Trulia, and Homes.com, and are the primary tool Agents use to find homes for their clients.

FOR SALE SIGNAGE

Digital marketing campaigns may cast the widest net, but sometimes the simplest methods of advertising are the most effective. Potential Buyers regularly cruise their preferred neighbourhoods in search of the perfect home; a “For Sale” sign on your lawn will let them know yours is available.

OPEN HOUSES

Open Houses are a great way to attract both active and passive Buyers. They create local buzz and word-of-mouth advertising that generates demand. During an Open House, unlike a private showing, the Listing Agent is onsite to provide potential Buyers with a comprehensive tour and answer questions. Open Houses, VIP Nights for Neighbours, and REALTOR® Caravans are all effective marketing tools we use to promote your home.

STEP #6
THE OFFER PROCESS

The highest offer isn't always the best offer. Price may play the fundamental role in a Seller's evaluation, but a truly compelling offer extends beyond the dollar amount. Savvy Sellers will weigh several other major factors to determine an offer’s value, including the closing date, contingencies of sale, distribution of closing costs, Buyer financing, the inclusion and exclusion of chattels and fixtures, and the earnest money deposit.

The objective of any offer is to secure the best price for your property with the fewest contingencies of sale and out-of-pocket closing costs, without compromising your preferred closing date or incurring any repair or remediation expenses. Your REALTOR® will help you objectively evaluate each Buyer's proposal and will negotiate on your behalf to secure the best deal without compromising your goals.

In California, a Buyer’s offer is conveyed using the Residential Purchase Agreement and Joint Escrow Instructions (RPA). California RPAs are more detailed than Canadian Purchase Agreements, requiring a greater amount of information to provide clarity and to help protect the Buyer and Seller from unforeseen challenges and disputes.

Key elements outlined in a California Residential Purchase Agreement are:

Purchase Price: The amount the Buyer is offering to purchase the property.

Earnest Money Deposit: The funds the Buyer deposits into escrow to demonstrate their commitment to the purchase, usually 3% of the purchase price.

Expiration of Offer: The deadline the Seller has to respond to a Buyer’s offer, typically three business days from Buyer signing.

Financing Terms: An overview of the Buyer's financing, including loan type, loan amount, interest rate, and Lender details.

Time of Possession/Closing: The date the sale will close, and the Buyer will take possession of the property.

Items Included and Excluded: A detailed list of the chattels and fixtures included or excluded in the purchase price, such as the appliances, light fixtures, furnishings, security system, hot tub, and landscaping.

Contingencies: The conditions included in an offer that must be satisfied for the sale to proceed. Common contingencies include a home inspection, appraisal, loan approval, sale of Buyer’s property, and the review of the title report, Seller’s documents, HOA documents, and all required disclosures.

Allocation of Costs: A breakdown of the fees associated with closing the sale, including Lender fees, title insurance, escrow, transfer taxes, HOA dues, and home warranty, and who pays for each - Buyer or Seller, or both equally.

After receiving an offer to purchase, you have the option to accept the offer as presented, counter the offer by adjusting some of the elements proposed or reject the offer outright. If, as the Seller, you accept and sign the offer, you’re agreeing to all the terms and conditions set forth in the Buyer’s Residential Purchase Agreement (RPA) and creating a legally binding contract. When you counter an offer with changes to the terms, the Buyer can then decide to accept, counter, or reject the revised Agreement based on your changes. Rejecting a Buyer’s offer means the offer is no longer valid and cannot be accepted later unless a new offer is made. Once the RPA is signed by the Buyer, you typically have three days to respond; however, the Buyer can include a shorter timeframe in their offer. When a final agreement is reached, the contract is ratified and returned to the originating party.

BEFORE YOU SIGN

Remember, the California Residential Purchase Agreement is a binding legal document. Be sure that you read and fully understand everything outlined in the offer paperwork before you sign it. When in doubt, have a Lawyer review your offer documents before signing.

HANDLING MULTIPLE OFFERS

In the event of a multiple offer situation, you have the option to counter more than one Buyer’s offer using the Seller Multiple Counter Offer (SMCO). The SMCO allows you to send a unique counter offer to each Buyer or request that all Buyers resubmit their “highest and best” offer by a firm deadline. Based on the Buyers' response to your SMCOs, you can decide to accept an offer or keep negotiating with one or more parties until a deal is reached.

BACKUP OFFERS & KICK-OUT CLAUSES

In California, Sellers can continue to promote and show their property, and receive offers from other interested Buyers while under contract. These “backup” offers must be contingent upon the failure of the original Buyer’s contract. If the original Buyer can't proceed, the backup offer becomes the primary offer, and the sale can continue without the need to re-list the property. Sellers also have the option to “kick out” an original Buyer whose offer was conditional upon contingencies, for a new offer from a Buyer without contingencies. In this scenario, you would notify the original Buyer, giving them a timeframe to remove their contingencies, or you will proceed with the new offer, effectively canceling the initial contract.

PATIENCE & PERSISTANCE

Offer negotiations can spark many emotions that can lead to poor decision-making. If a Buyer's offer does not meet your needs or market expectations, you don't have to accept it. A great REALTOR® will remind you of your non-negotiables and support you through the sale of your home for as long as it takes.

STEP #7
OPENING ESCROW

Unlike in Canada, where a Real Estate Lawyer reviews the Purchase Agreement and the supporting legal documents, arranges for title insurance, ensures there are no liens or claims, and warrants clear title to the property, in Southern California, most of the duties of a Canadian Real Estate Lawyer fall to an Escrow Company. The Escrow Company, often selected by the Seller but mutually agreed upon, serves as a neutral intermediary between all parties – the Buyer, the Seller, their respective Real Estate Agents, their Lenders, and the Title Company. They collect contractually required funds and documents, manage deliverables, and upon closing, distribute funds according to the instructions outlined in the RPA.

The date that escrow is opened marks the start of the contingency period. Similar to how the “conditional period” works in Canada, during the contingency period the Buyer and the Seller are to complete any contractual obligations within the specified time limit, to move the sale forward. The home inspection, loan approval, appraisal, and review of all required documents and disclosures, including the preliminary title report, are central to the Buyer’s due diligence and their ability to address any potential issues with the home before the sale becomes final.

The time between the opening of escrow, when the contract is ratified, and the closing of escrow, when the deed is recorded, is typically 30 to 60 days.

EARNEST MONEY DEPOSITS

Earnest money is the good faith deposit paid upon acceptance of a purchase offer. It secures the property while the transaction is in escrow and demonstrates the Buyer’s commitment to the purchase. Earnest money deposits are usually 1%-3% of the purchase price and are typically issued by cheque or wire transfer to the Escrow Company within 1-3 days of a signed Agreement. In a multiple offer situation, Buyers will often include earnest money with their offer submission to help strengthen their position. The higher the deposit, the greater the incentive the Seller has to select one Buyer's offer over another.

Once a Buyer's earnest money has been received in escrow, it’s held until closing to be applied to their down payment and closing costs. Should the sale fall through before closing, depending on the terms of the RPA, their deposit may be refunded in part or in full.

STEP #8
CONTINGENCY FULFILLMENT

Purchase contingencies give Buyers the time and opportunity to complete their due diligence on a property. Should a contingency not be met or satisfied within the stated timeframe, both the Seller and the Buyer may have the right to terminate the contract or negotiate new terms of agreement.

If all the purchase contingencies are met, satisfied, and removed, the Buyer is now committed to purchasing the property, and the Seller is obliged to sell. If the Buyer defaults on the purchase after the contingencies are removed, the Seller may be entitled to the Buyer's earnest money as liquidated damages and could pursue legal action for breach of contract.

Contingency fulfillment for a California residential purchase generally takes 17 to 21 days.

COMMON CONTINGENCIES

APPRAISAL

Property appraisals are required by Lenders as a condition of mortgage approval. They are an assessment of the home’s value, helping to safeguard the Lender’s investment.

A licensed Real Estate Appraiser will determine the fair market value of your property using recent comparable sales and local market data. If the appraised value is less than the Buyer's purchase price, the Buyer can opt to pay the difference to their Lender in cash, try to renegotiate the sale price with you, or terminate the contract. The Buyer could also request a second appraisal if they believe the initial report doesn't fairly represent the property's value.

The cost of a property appraisal in California typically ranges between $300-$600 and is usually paid for by the Buyer. The standard appraisal contingency gives the Buyer 17 days to review and be satisfied with the appraisal.

FINANCING

In addition to the appraisal, when a Buyer requires mortgage financing to purchase a home, their offer will include a financing or mortgage contingency clause. A Buyer's Pre-Approval Letter does not guarantee final loan approval. To secure a mortgage, the Buyer will need time for their Lender to conduct a thorough underwriting process, reviewing the Buyer's financial history and creditworthiness.

Financing contingencies are typically 21 days.

HOME INSPECTION

A home inspection is a necessary step in any real estate transaction, offering an impartial assessment of your property's condition. It can uncover any property defects and safety concerns that were unknown to you, and subsequently undisclosed to potential Buyers.

A licensed Home Inspector will examine your property’s interior and exterior, including the electrical, plumbing, heating and air conditioning systems, foundation, roof, and other structural elements, itemize their findings in a report for the Buyer's review. Sellers are required to provide access to their property for the 2-3 hour home inspection, which will be attended by the Buyer and/or their Agent; you are not required to attend. Beyond the standard home inspection, the Buyer may also request specialized inspections for mold, asbestos, lead, radon, termites, and other pests.

If the home inspection report reveals any major deficiencies, the Buyer can choose to proceed with the purchase, accepting the home as is, try to negotiate with you for the repairs or a credit against the purchase price, or cancel the contract.

At California Homes for Canadians, we strongly recommend getting a Pre-List Home Inspection to help identify any property defects that you can repair or remediate before your home goes on the market. An ounce of prevention is worth a pound of cure.

Home inspections range in price from $300-600, depending on the size of the property and the scope of the inspection, and are customarily the Buyer’s responsibility. The average timeline for a home inspection contingency is 17 days.

PRELIMINARY TITLE REPORT REVIEW

A preliminary title report provides the Buyer and the Seller with the opportunity to examine the property’s ownership history and identify any potential issues such as liens, encumbrances, legal claims, or title defects that could jeopardize clear ownership, before committing to the purchase. If issues are discovered during review of the preliminary report, the Buyer and the Seller will typically work together to resolve or mitigate the concerns before closing. If the issues cannot be resolved, the Seller can negotiate with the Buyer an adjustment to the purchase price, or the Buyer may opt to terminate the contract. It's important to remember that the preliminary report is not a complete history of all recorded documents related to the property and should not be considered a final representation as to the condition of the title.

REVIEW OF SELLER'S DOCUMENTS

As a Seller in California, you are legally obligated to disclose, in writing, any material facts about your property that could affect its value or desirability. These disclosures empower Buyers to make informed decisions, which can help prevent legal issues after the sale. If you fail to provide the required documents and disclosures, or if the information revealed in the disclosures is found to be unacceptable to the Buyer, the Residential Purchase Agreement could be renegotiated or cancelled outright.

Standard Seller Documents and Disclosures:

Transfer Disclosure Statement (TDS)
California Natural Hazard Disclosure Statement (NHDS)
Lead-Based Paint Disclosure & Protect Your Family from Lead in Your Home Pamphlet
Residential Earthquake Risk Disclosure Statement & Homeowner's Guide to Earthquake Safety
Homeowner Association (HOA) Documents
Mello-Roos Community Facilities Act Tax Disclosure
Notice of Supplemental Property Tax Bill Disclosure
California Appraisal Discrimination Addendum Disclosure

See a detailed description of these documents and disclosures in Step #3.

SALE OF BUYER'S PROPERTY

A home sale contingency means the Buyer's purchase of your home is dependent on the successful sale of another property. While this condition offers the Buyer protection if their property doesn’t sell in a timely manner, it introduces considerable uncertainty and potential delays to your closing. As a Seller, accepting an offer with a home sale contingency carries the risk that the deal will fall through if the Buyer's property doesn't sell. However, your REALTOR® should include a kick-out clause to restrict the home sale contingency, allowing you to force the original Buyer to remove their contingency if a better, non-contingent offer is received.

STEP #9
REMOVAL OF CONTINGENCIES

The contingency removal process is a critical phase in a real estate transaction, when the Buyer conducts their due diligence to determine if the property meets their expectations before committing to the purchase. During this period, typically 17 to 21 days, the Buyer will conduct various investigations including a home inspection, appraisal, preliminary title report, mortgage financing, and review of all Seller documents and disclosures. Escrow will help manage the exchange of documents between you and the Buyer to ensure that all contractual conditions, including the formal removal of the contingencies, are satisfied before the sale is finalized.

Once the Buyer has completed their due diligence, if they are satisfied with their findings, they will provide a Buyer Contingency Removal Form, waiving their right to cancel the contract based on those specific conditions. If the Buyer is not satisfied, they can try to renegotiate the terms of the Residential Purchase Agreement with you or cancel the contract.

It’s important to monitor contingency deadlines closely. If the Buyer fails to remove a contingency by its due date, your REALTOR® can issue a Notice to Buyer to Perform, demanding that the Buyer fulfill the specific contractual obligation within a set timeframe or cancel the Agreement. Should the Buyer choose to terminate the Agreement after removing their contingencies, you may be entitled to a portion of, or the full, earnest money amount.

STEP #10
CLOSING THE SALE

We’re in the home stretch! With all the contingencies removed, the process of officially closing the transaction begins. Closing the sale requires a true team effort that culminates with the recording of the deed at the County Clerk’s office. In the days leading up to the end of escrow, make sure you maintain frequent contact with your REALTOR®, Lender, Escrow Officer, Title Insurance Company, and if required, your Lawyer, to provide prompt resolution of any last-minute details.

Knowing what to expect during the final stage of a real estate transaction will help ensure a smooth and successful home .

TITLE INSURANCE

In preparation for the close of escrow, the Title Company will complete a thorough search of public records to verify the property's ownership history and confirm the title is free of any legal claims or defects.

The purchase of title insurance protects Buyers from potential financial loss if any unforeseen title issues arise after closing. In California, the standard Owner's title insurance is a CLTA (California Land Title Association) policy; it provides basic coverage against title defects found in public records. For more comprehensive protection, an ALTA (American Land Title Association) policy insures against title risks not found in public records. If your Buyer is financing their purchase, their Lender will often require the extended protection of an ALTA policy to shield them from any financial burden should a title issue occur.

Title insurance premiums are a one-time fee paid at closing that provides protection for the entire period of ownership. In the Greater Palm Springs Area, the Seller is usually responsible for the cost of the Owner’s title policy, and the Buyer pays the cost of the Lender’s title policy, if required. However, these responsibilities are negotiable.

FINAL WALK-THROUGH

The final walk-through is the Buyer's last opportunity to inspect the property before signing the closing documents and taking possession.

During the walk-through, the Buyer, their Agent, and potentially a Home Inspector will carefully examine the interior and the exterior of your home. They will test the appliances, HVAC system, plumbing, and electrical; and inspect the walls, ceilings, floors, cabinetry, windows, doors, the roof, siding, any fencing or decks, and all the fixtures. Sellers aren’t traditionally present during the walk-through, so in preparation for the visit, make sure your home is clean, that all systems are operational, and that any repair work specified in the Residential Purchase Agreement is completed.

If any new issues or incomplete repairs are discovered during the walk-through, you will need to resolve these concerns promptly. This may include negotiating the repairs, offering a credit to the purchase price, or a combination of both. If you are unable or unwilling to complete the repairs or renegotiate the sale to the Buyer’s satisfaction before closing or by a mutually agreed-upon date, the Buyer may be entitled to cancel the purchase and recover their earnest money, and potentially pursue additional monetary damages.

SIGNING CLOSING DOCUMENTS

It’s time to make things official! With all the Residential Purchase Agreement conditions met, the Escrow Company will now prepare the necessary closing documents for your signature, including the deed, Seller’s affidavit, closing statement, loan payoff statement (if applicable), and tax forms. Before signing, consult with your REALTOR®, a Lawyer, and your Accountant, if you have any outstanding questions or concerns. It's important to fully understand each document.

Signing the closing documents can be challenging for Canadians not present in the U.S. The State of California does not accept the notarization of documents by a Canadian Notary. To authenticate your closing documents from Canada, you will either need to make an appointment at the closest U.S. embassy or consulate to sign in front of a U.S. government official, or use a Remote Online Notary (RON). RON services allow your documents to be notarized via secure video conferencing, eliminating the need to be physically present before a Notary. While the implementation of RON services in California is currently stalled, the State does recognize commissioned Notaries from other U.S. States.

Remember to thoroughly investigate a Remote Online Notary for compliance before engaging their services.

CLOSING COSTS

Canadian Sellers of U.S. property must plan for a variety of closing costs unique to the American, and more specifically, the Southern California real estate market. Seller closing costs in the U.S. range between 5% and 10% of the sale price, a much higher percentage than incurred by the Buyer. Unlike Canada, where the split between the Buyer and Seller is often more equitable, U.S. real estate transactions require more closing costs, and this burden typically falls to the Seller. However, the distribution of closing costs can be negotiated based on the strength of a Buyer’s purchase offer, the Seller's motivation, and the overall health of the local real estate market.

Typical Seller Closing Costs in Southern California*:

Real Estate Commission**: Negotiable
Seller-Related Escrow Fees: $2.00 per $1,000 of the purchase price + $350
Payoff of Seller Loans: Varies, if applicable
County Documentary Transfer Tax: $1.10 per $1,000 of the purchase price
City Transfer Tax: $0.55 per $1,000 of the purchase price
Home Warranty: $500-$1,000
Owner's Title Policy: 0.5%-1% of the purchase price
Tax Proration: Varies
Document Preparation Fee: $100-$200
Recording Fees to Clear Documents: $150-$250
Notary Fees: $125-$250
Lawyer Fees: $1,000-$2,500 (not required but recommended)

*The above closing costs are just estimates and will vary based on individual circumstances and market conditions.

**Recent changes to REALTOR® commissions, stemming from the National Association of Realtors (NAR)'s settlement in antitrust lawsuits, have effected how commissions are negotiated and paid in real estate transactions. Consult your REALTOR® for more information.

FOREIGN INVESTMENT IN REAL PROPERTY TAX ACT
(FIRPTA)

FIRPTA is a U.S. tax law that imposes income tax on foreign persons who dispose of U.S. real property interests. When a foreign person sells U.S. real estate, FIRPTA requires the Buyer of the property to withhold a percentage of the gross sales price and submit it to the IRS. This withholding serves as a prepayment of the foreign Seller's potential U.S. income tax liability. While the responsibility for withholding falls on the Buyer, the Seller can apply for a withholding certificate from the IRS to reduce or eliminate the withholding if they can demonstrate that the actual tax liability will be less than the withheld amount, or if an exemption applies. It's imperative that both the Buyer and the Seller in a real estate transaction involving a foreign person understand FIRPTA's implications, as failure to comply can result in significant penalties.

The standard FIRPTA withholding rate is 15% of the gross sales price. A reduced rate of 10% withholding will apply if the purchase price is between $300,001 and $1,000,000 and the Buyer is an individual who intends to use the property as their primary residence. There is no withholding if the purchase price is $300,000 or less and the Buyer (an individual) or a member of the Buyer's family intends to reside at the property. The Buyer is responsible for submitting Form 8288 and Form 8288-A with the appropriate withholding amount to the IRS within 20 days of the date of transfer.

STATE OF CALIFORNIA FOREIGN SELLER TAX

In addition to the Foreign Investment in Real Property Tax Act (FIRPTA), Canadian Sellers of California real estate are also required to pay 3.33% of the gross sales price to the Franchise Tax Board (FTB). Similar to FIRPTA, this amount is withheld and remitted by the Buyer as a prepayment of the tax owed.

Sellers should use Forms 593 and 540NR to report, reconcile, and potentially reduce their final liability. To comply with this tax obligation, Canadians must have an Individual Taxpayer Identification Number (ITIN).

For more information about your tax liabilities as a Canadian Seller of U.S. property, including the filing of U.S. and Canadian tax returns, speak to your Accountant or contact a cross-border tax professional.

TITLE TRANSFER & DEED RECORDING

In California, property ownership officially changes hands when the deed is recorded at the County Clerk's office. Recording the deed provides public notice of the new legal ownership, establishes clear title to the property, and protects against fraudulent claims and unforeseen liens. As soon as confirmation of the recording is received, the Escrow Officer will distribute the funds from the escrow account to cover the incurred closing costs, including transfer and property taxes, title insurance, real estate commissions, and any other outstanding debts associated with the property. The remaining balance is your net proceeds from the sale. Escrow will also provide an official closing statement detailing all transactions.

It's time to turn over your keys and move out.

Congratulations you’ve sold your home!

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