Selling your home is one of the biggest decisions you can make in your adult life. The past few years may have played a role in the decision-making of your living situation.
Staying at home more frequently, many Canadians found their home to be too small for their growing family. A bigger home, with more space to call your own, a beautiful yard, and extra rooms for every person is one of the strongest factors that influence people to move.
Maybe you need to move to a new location. You’ve been wanting a change of pace, or perhaps, work is taking you someplace where it’s economical to sell your current home. Or maybe, there’s a need for you to make space for your elderly parents or in-laws?
Whatever reason there may be that’s pushing you to sell your home, there’s a couple of things you need to remember to make this journey of your life a success. You might be imagining yourself happily holding that handsome cheque and sashaying away to your next abode… but before you start imaging where your windfall is going, there are some expenses you need to prepare for.
Expenses? If you’re selling a home, why do you have to pay for anything? The closing day may be payday for you, but before you splurge, there are some Closing Costs you need to cover first.
Closing costs are fees owed on or before closing day that must be paid for your home sale to be completed.
To give you a rough idea of what to expect, we’re sharing some of the most common expenses in this list. These expenses are approximations only, may vary by region and are prone to frequent changes that may not be reflected here.
- Realtor’s Commissions
It’s a common misconception that buyers have to pay realtors or real estate agents commissions. But the truth is, sellers are responsible for this fee. These commissions can set you back somewhere between 3-6% of the selling price of your house.
Some sellers wish to avoid this service fee, and so they try to sell their houses themselves. Carefully study this option, and understand the challenges you might face, before deciding on this.
- Legal Fees
Unless it is under very limited circumstances, both the seller and buyer will be working with their own real estate lawyer. You are required to get a lawyer to help you sort through all the legal paperwork involved to make this an accurate and binding transaction.
Legal fees will include services like legal documentation, reviewing the title, discharging any mortgages, delivering the closing packages to the buyer’s lawyers, and more.
- Closing Adjustments
Part of your real estate lawyer’s task is to prepare a statement of adjustments. It is like a bank statement that includes a list of debits and credits with the balance at the end. These adjustments depend entirely on how you pay your property taxes, condo fees, and some utilities.
- Bank Fees
If your home is on a mortgage and you plan to pay it off with your income from the sale of the property, there may be bank fees to take care of.
- Costs of Repairs or Replacements
The buyer of your home may request for some repairs or replacements on certain areas of your home in their buyer offer. It could be upgrading electricity wiring upgrades or roof repairs or mould removals. Be ready to shell out costs here.
- Home Staging Cost
It’s always a great idea to “dress up” your home for potential buyers. A bit of cleaning and decluttering won’t cost you much, but sometimes, it’s good to show potential buyers what this home could be like for them. That might mean buying a few accessories and tools. Budget wisely and work with a professional to highlight the best parts of your house.
- Moving Costs
Unless you are uprooting yourself to another country, you are most likely moving from one house to another. Many factors are involved in the price of this cost.
- Capital Gains Tax
In Canada, 50% of the value of any capital gains are taxable. Are you selling your primary residence? If yes, good news, your primary residence is exempt from capital gains!
These 8 possible closing costs might take you by surprise if you haven’t factored them in your real estate transaction.
Talking with your lawyer and discussing all the details makes a world of a difference. Here at Integris Law, we can do the heavy lifting for you.