While every Seller’s financial situation is different, there are some common costs that Sellers should be aware of, and budget for, when planning to sell their home.
1. Realtor Commissions
It is most common for Sellers to be responsible for Real Estate commissions for both the Listing Realtor and the Buyer’s agent. These costs are paid out of the proceeds of sale and are outlined in the Listing agreement. In BC commissions are 7% of the first $100,000 and 2.5% of the balance plus GST. This amount is split between the agents.
2. Legal Fees
Upon a successful sale, a lawyer or a notary is retained to finalize the transaction. They will be responsible for reviewing all contracts and preparing the legal paperwork for closing, issuing a statement of adjustments for taxes or utilities owed or prepaid, reviewing and discharging the title for the property and mortgage, ordering an insurance binder, and witnessing signatures. In most cases either a lawyer or notary will be able to do this however, there are some cases where it is imperative to have a lawyer acting on behalf of the Seller. Legal fees can range from $1500 to $2000 but can vary widely depending on the transaction.
3. Closing Adjustments
The statement of adjustments prepared by the lawyer or notary upon closing will consider any taxes owed, city utilities owed, or strata fees due. In cases where these amounts are paid in advance there will be a credit to the Seller. Likewise, if these amounts are outstanding at closing, the Seller will be responsible for these amounts up to the closing date.
4. Bank Fees
If there is a mortgage and you plan to pay it off with the proceeds of the sale, it may be subject to prepayment penalties if prior to the completion of the term. Most banks allow a homeowner to transfer (aka port) the mortgage to a new home, often saving thousands on discharge penalties. However, it can also sometimes be more profitable to payout the existing mortgage, regardless of fees, and renegotiate terms on a new mortgage.
5. Repairs or Replacements
Some Sellers are aware of the areas of their home that need repair and choose to address these repairs prior to listing their home for sale. This is something that should be discussed with your Realtor as the nature of the repair, market conditions, and urgency of a desired sale will determine how to best proceed. When an offer is received, a Buyer may request certain repairs or replacements. This often comes up following home inspections and is negotiated immediately prior to subject removal (firming up the contract). Some popular repair requests include:
• Roof repair
• Heating or cooling system repair
• Hot water tank replacement
• Remediation of leaks
• Mould removal
• Electrical repair or upgrades
6. Home Staging
If you plan to stage your home to make it more appealing to prospective Buyers, there will be additional costs for furniture rental or purchase, home décor items, and the services of a professional stager.
7. Moving
Moving costs can vary depending on how many possessions, distance of the move, if using professional movers or DIY. Some strata titled properties also charge a move out fee ranging for $100 - $200. A reputable moving company will be able to provide you with a quote for their services.
8. Capital Gains Tax
When selling a principal residence, homeowners are not required to pay tax on the profits of that sale. However, when selling a secondary residence, Capital Gains Tax may be payable on up to 50% of the profit. An accountant can advise on the tax implications of a potential sale.
1. Realtor Commissions
It is most common for Sellers to be responsible for Real Estate commissions for both the Listing Realtor and the Buyer’s agent. These costs are paid out of the proceeds of sale and are outlined in the Listing agreement. In BC commissions are 7% of the first $100,000 and 2.5% of the balance plus GST. This amount is split between the agents.
2. Legal Fees
Upon a successful sale, a lawyer or a notary is retained to finalize the transaction. They will be responsible for reviewing all contracts and preparing the legal paperwork for closing, issuing a statement of adjustments for taxes or utilities owed or prepaid, reviewing and discharging the title for the property and mortgage, ordering an insurance binder, and witnessing signatures. In most cases either a lawyer or notary will be able to do this however, there are some cases where it is imperative to have a lawyer acting on behalf of the Seller. Legal fees can range from $1500 to $2000 but can vary widely depending on the transaction.
3. Closing Adjustments
The statement of adjustments prepared by the lawyer or notary upon closing will consider any taxes owed, city utilities owed, or strata fees due. In cases where these amounts are paid in advance there will be a credit to the Seller. Likewise, if these amounts are outstanding at closing, the Seller will be responsible for these amounts up to the closing date.
4. Bank Fees
If there is a mortgage and you plan to pay it off with the proceeds of the sale, it may be subject to prepayment penalties if prior to the completion of the term. Most banks allow a homeowner to transfer (aka port) the mortgage to a new home, often saving thousands on discharge penalties. However, it can also sometimes be more profitable to payout the existing mortgage, regardless of fees, and renegotiate terms on a new mortgage.
5. Repairs or Replacements
Some Sellers are aware of the areas of their home that need repair and choose to address these repairs prior to listing their home for sale. This is something that should be discussed with your Realtor as the nature of the repair, market conditions, and urgency of a desired sale will determine how to best proceed. When an offer is received, a Buyer may request certain repairs or replacements. This often comes up following home inspections and is negotiated immediately prior to subject removal (firming up the contract). Some popular repair requests include:
• Roof repair
• Heating or cooling system repair
• Hot water tank replacement
• Remediation of leaks
• Mould removal
• Electrical repair or upgrades
6. Home Staging
If you plan to stage your home to make it more appealing to prospective Buyers, there will be additional costs for furniture rental or purchase, home décor items, and the services of a professional stager.
7. Moving
Moving costs can vary depending on how many possessions, distance of the move, if using professional movers or DIY. Some strata titled properties also charge a move out fee ranging for $100 - $200. A reputable moving company will be able to provide you with a quote for their services.
8. Capital Gains Tax
When selling a principal residence, homeowners are not required to pay tax on the profits of that sale. However, when selling a secondary residence, Capital Gains Tax may be payable on up to 50% of the profit. An accountant can advise on the tax implications of a potential sale.
