Last time we talked about the many costs associated with buying a home. While there are a few less individual fees for selling (and many may not apply), the overall total cost is usually much greater.
Legal Fees and Disbursements: You’ll need a lawyer to take care of all the legal documents, transfer of ownership and disbursements needed to close the deal. Budget $750-1300 for lawyer fees.
Moving Costs (same as in the buyer costs article): To hire a team of movers with a truck, you will be looking at roughly $800 to $1200, depending on the amount of things that you have needing to be moved and the distance of the move. If you prefer to do the move yourself, budget $50-$100 for a truck rental and a similar amount for beer/pizza for your friends!
Realtor Fees: The real estate agent you hire will be splitting a commission along with the buyer’s agent. This commission could range from 3.5% to 6% based on the Realtor you choose, the services provided and (often) the quality of work. A typical commission rate in the GTA for an agent is 5%, with 2.5% going to the buyer’s agent.
Utilities and Property Tax Adjustments: You have to pay your share of these bills until the deal closes. If your house closes in the middle of the month, then you will be responsible for half of the utility bills and property taxes for that month. Different percentages apply based on the date of closing and the amount of days in the month.
Mortgage Discharge Fee: Unless your mortgage is entirely paid off, you will have to pay either a discharge fee or a fee to have your mortgage switched onto your new property. These fees vary and can range from $100-$300 depending on your bank and the service provided.
Mortgage Penalties: If you have a “closed” mortgage, your bank may charge early cancellation or interest penalties in order to discharge. For more information on fees for early termination, see this TD link: http://www.tdcanadatrust.com/products-services/banking/mortgages/managing-your-mortgage/mortgage-prepayment/prepayment.jsp.
Capital Gains Tax: Usually, you have a capital gain (or loss) when you sell capital property. Capital property is defined as a property that is purchased or maintained for the purpose of capital generation or preservation. This usually means an income property, or property which is not your principal residence. It can also apply in other circumstances, so it is best to discuss with your lawyer as to whether or not this applies to your situation. When you sell a capital property for more than the total of its cost+expenses+costs of selling the property, then you have a gain and must pay income tax on half of the amount of the gain. Again, this is a complicated scenario and if it applies to you it is best to seek professional help.
Home Staging: Obviously an optional fee, but one that can give a great return on investment. As an added benefit, staged homes typically take significantly less time to sell! There exist many different levels of home staging. From a basic consultation about where to move your existing furniture, colors to paint walls, decor etc. to a total overhaul where new furniture and decorations are brought in. Expect to pay roughly $250-$500 for a home staging consultation (FREE with Kyle and Jay!) and $500-$10,000 depending on the extent of work done, the time required for rental items and the size of the space being staged. For more on home staging read our article: http://www.kyleandjay.ca/Blog.php/home-staging-and-preparing-your-home-for-sale.
Hopefully this gives you all a better idea of the true costs of selling your home. Keep this in mind when setting up a budget to buy your next place.