Are you listing your home for sale? Then you’re likely wondering what fees are involved in selling a house in Canada.
Listing your home in the Canadian real estate market involves much more than the transaction itself. Many fees, rules and participants are involved, some of which you may not be aware of. Here’s a rundown of what you need to know when selling a house in Canada.
What You Need to Know About Selling a House in Canada
First, it is crucial to know that when fees are involved in selling a home, the funds are distributed by the seller’s attorney on the closing date. They consist of the commission, the lawyer’s fees, and costs associated with the transaction’s closing, such as land transfer taxes.
But what other costs should you factor in to pay?
Mortgage Pre-Payment Penalties
Do you still have a mortgage on your property? If you plan to sell your home before the maturity date of the mortgage term, you will likely face pre-payment penalties. Now, the penalty amount will depend on the mortgage contract. However, penalties are estimated to consist of three months of interest or the interest rate difference (IRD). The latter is calculated on the difference between your present mortgage rate and the new mortgage offered by your lender.
Legal Fees and Realtor Commissions
As previously noted, there will be legal fees and real estate agent commissions. But how much are they? Generally, the legal fees can range between $500 and $2,500, while real estate agent commissions vary depending on a number of factors. Remember that these expenses will incur GST/HST, potentially adding a couple of thousand dollars to your closing costs.
And yes, it is recommended that you hire a real estate attorney and work with a real estate agent.
Home Inspection Fees
In a buyer’s market, homebuyers will generally request a home inspection before purchasing your home. In certain circumstances, you might be responsible for covering the costs of a home inspection, which can be as high as $500 to $1,000. However, this is usually the buyer’s responsibility. To create an air of transparency and make potential buyers feel more confident about making an offer, some sellers will complete a home inspection before listing the house for sale and make the report available to potential buyers.
It might not be that common, but rental contracts could be connected to your home. For example, this might be a rented furnace or air conditioning system. It is common for buyers to assume a water heater rental contract when purchasing a home. However, most buyers are loathe to take on the monthly payment of an HVAC system and will usually insist they be paid out in full as a condition of purchase.
Staging Your Home
Back in the day, it might have been enough to paint your walls and tidy up. Today, however, you should do a little bit more, whether it is substituting your furniture or hanging paintings on the wall. This is known as home staging.
Is this necessary? No. But industry experts say that home staging can add thousands of dollars to your price tag since this component can place your home in the best possible light.
“The cost for staging your house can range from several hundred to several thousand dollars. The cost will depend on how much fixing up your place needs. You may be able to save by doing the staging yourself. But prepare to pay for things like storage space potentially. Some real estate agents provide staging as part of their services,” Sunlife Financial said in a report.
Of course, if this is not something you want to do, you can always spend a couple of dollars on garbage bags, paper towels, window cleaners, Lysol wipes, and room fresheners to make the place look and smell nice and declutter spaces.
Buying and Selling a Home in Canada is Expensive
Buying and selling in the Canadian real estate market is already an expensive endeavour. For many households, it can be costly, from accumulating a down payment to covering mortgage costs. That said, buyers and sellers need to be aware of a long list of expenses, such as mortgage pre-payment penalties and real estate agent commissions. Before you start your journey to selling your property or achieving the dream of homeownership, it is first vital to become acquainted with what you are spending and then make a budget to ensure that you won’t be surprised by these additional expenses.