When you’re preparing to sell your home, it’s essential to be aware of the various expenses associated with the process. Here’s a breakdown of the key costs you might encounter:
- Legal Assistance: Lawyer Fees When engaging in property transactions, a professional lawyer is crucial to ensure a smooth process. Your lawyer will handle tasks such as discharging the title and mortgage, verifying prepaid expenses, clearing utilities, and managing the transfer of ownership to the new buyer. Typically, you can expect to invest between $700 and $1,500 for these legal services.
- Real Estate Services: Agent Fees If you choose to work with a real estate agent, be mindful of the associated commissions. A Seller working with a Realtor covers commission for both Seller & Buyer agents. Even if you opt for a discount listing or sell by owner (FSBO), you may still incur expenses, especially when offering a commission to the buyer’s agent. Consider your time and expertise when deciding whether to enlist professional help.
If you hire an agent, other than listing the property on MLS (and multiple other Online platforms) they handle various marketing expenses, including professional photoshoots, filming, 3D Matterport tours, Google & Facebook ads, ordering 2 years of strata documents, and more.
The commission rate is usually 7% on the first $100,000 & 3% on the remaining balance. For a $1,000,000 home, the commission would be around $34,000. This is the sum of the commission on the first $100K of $3,500 and the commission on the remaining portion of $13,500. This commission will be typically split between the Seller and Buyer agents. The same Agent cannot represent both a Buyer & a Seller in one transaction.
- Mortgage-Related Fees: Discharge and Prepayment Selling a home with an existing mortgage involves mortgage discharge fees, which can reach up to $700. Additionally, check for mortgage prepayment penalties, usually around 3 months of interest on your outstanding balance. Transferring your mortgage (Porting) to a new home might help you avoid these penalties.
- Tax Considerations: Capital Gains Tax If you’ve made a profit on the sale, be prepared for capital gains tax. Investors may be subject to a 50% tax on their capital gain, but selling your primary residence usually qualifies for a principal residence exemption in Canada.
- Preparing Your Home: Maintenance, and Repairs Consider professional cleaning and repairs, with costs potentially exceeding $1,000. Prioritize repairs that can increase your home’s value.
Consult a Realtor for renovations & repairs suggestions to increase value for prospective Buyers. - Moving Expenses Whether hiring professionals or opting for a DIY move, budget for moving truck costs. Local moves typically range from $1,000 to $3,000, depending on your home’s size, while cross-country moves can reach $6,000 to $20,000, depending on the distance.
- Government Mandates: Property Transfer Tax In British Columbia, property transfer taxes are the responsibility of the home Buyer. If you’re selling and purchasing a new home, budget for this tax, which can be a significant expense, such as $14,000 for an $800,000 home, as an example.
In summary, understanding the comprehensive costs associated with selling your home allows you to estimate expenses accurately and plan accordingly. Keep in mind that investing in your property can lead to a more profitable sale in the long run.