Closing costs will be a factor whether you’re selling your home or buying a new one (or maybe both!).
But what are these costs? What can I expect, and what can I avoid?
We’ll detail costs for the Seller in this blog, so you won’t be surprised when you pen the final sign-off to sell your home.
- What are Closing Costs?
- Closing Costs for Sellers
- Real Estate Commission
- Pre-Listing Home Inspection for Houses
- Home Repairs
- Staging
- Mortgage Pre-Payment Fees
- Mortgage Discharge Fees
- Status Certificate for Condos
- Legal Fees
- Tax Implications
- Moving and Storage Costs
What Are Closing Costs?
Closing costs are fees and expenses paid when a home/property transaction is finalized. They vary depending on whether you are buying or selling.
Closing Costs for Sellers
Below are typical costs to expect when selling a home:
Real Estate Commission –
Real estate commissions are how agents are compensated for their time and efforts. In Ontario, the Seller typically pays the commission of the listing agent and the Buyer’s agent through the listing broker in a transaction. The Buyer’s agent commission is called a cooperating commission. Both commissions are paid through the listing brokerage and set out when the home is listed. On closing, the total commission is subtracted from the sale’s profits and transferred to their respective brokerages on closing.
Cost: This varies depending on the services offered, but a good estimation point is approximately 4% – 6%+HST of the property sale price.
Pre-Listing Home Inspection for Houses –
While not a requirement, having a professional conduct a home inspection before putting your home up for sale can save you money, time, and embarrassment. You wouldn’t want a potential buyer to leave because they found black mould in a corner or a sagging joist when it could have been prevented and addressed.
Cost: Varies, between $500-800 on average. *Note: Some listing agents will cover the cost of this inspection.
Home Repairs –
In most cases, repairs or small renovations are needed to attract more buyers and improve your chances of getting full value for your home. These costs could range from painting and minor repairs to updating the kitchen or bathroom. These fees will cover any renovations, improvements, or repairs agreed upon in the sale contract.
Cost: Varies, between $5,000 – $10,000 on average.
Staging –
Having a professional stage and decluttering your home can significantly impact potential buyers. This process can include minor improvements like new light fixtures and hardware, updating accents in the kitchen and bathrooms, and increasing curb appeal (gardens, soil, and small attractive features). Staging can also include the production of marketing materials to advertise your home’s sale, from pamphlets and brochures to social media posts.
Cost: Varies, but a good estimation is between $4,000 – $10,000. *Note : Not all staging is created equally. Depending on your area, investing in a more upscale stage will make a huge difference. Many full-service agents include staging as part of their commission package.
Mortgage Pre-Payment Fees –
Pre-payment penalties may be applicable, depending on when your mortgage term is up.
Cost: Three months of interest or the Interest Rate Differential (IRD).
Mortgage Discharge Fees –
To close out your mortgage early, you must pay your lender a discharge fee. Review your mortgage agreement or speak with your lender to determine this amount.
Cost: Variable.
Status Certificate for Condos –
This document details the legal and financial health of the condo corporation. It’s a common condition for potential buyers to be able to review this document before purchase.
Cost: $100-$300 and up to ten days to produce. *Note: Some listing agents will cover the cost of this inspection.
Legal Fees –
A real estate lawyer or notary will confirm legal property ownership and ensure any liens against the title have been cleared.
Cost: $1500 – $3000+ on average.
Tax Implications –
While primary residences are exempt from capital gains taxes, investment properties are not. In addition, if you are not a primary resident of Canada, you may be subject to an additional penalty called a withholding tax. Speak with your real estate lawyer to review your specific situation.
Cost: Variable
Moving and Storage Costs
Renting a moving truck or hiring a moving company can quickly add substantial costs. In addition, if you need to store some of your extra furniture and belongings that you don’t yet have a home for, renting a storage locker or unit will incur monthly fees. And don’t forget the gas costs when moving from one house to another!
Cost: $2000 – $4000 on average.
As with many big life moments, preparation is essential. If you’re getting ready to sell, ensure you have budgeted for the abovementioned costs. If you’d like additional professional help or advice with your sale, please get in touch with me.
Are you ready to move to the next stage? Let’s chat. Send me an email (hillary@hillarylane.ca) or text/phone (416-882-4707).
Photo by Katie Harp on Unsplash
