Want to move to a bigger house to accommodate your growing family? Purchasing a house in a new city? Hoping to downsize your big house to a smaller one? For whichever reason you want to sell your house, there are plenty of things you would have to take care of.
You are most likely going to earn a profit for selling your home, especially if you have been living in a high value area, and you are already looking for a new home within that expected range of profit you are hoping to earn. However, there is one thing many sellers are not aware of and that is the hidden costs of home selling in Canada.
These expected costs can gradually make up a major figure and can affect the budget you have made for the new house. Therefore, it is integral to consider these costs to ensure you make informed financial decisions.
Following are the things you’d have to pay for when selling your house:
Preparing Your Home for Staging and Viewing
I always tell my clients who are hoping to sell their house on a good profit that the first impression makes a lasting impact on buyers. This is the reason why I always recommend them to prepare their home before the viewing session and opt for professional home staging to make the house appealing to the potential buyers.
Investing in home staging and preparation mostly includes the costs for:
- Minor repairs
- Professional cleaning
- Refreshing the paint
- Moving excess furniture to a storage facility
- Hiring a professional home stager
Many sellers also consider some renovations in hopes of increasing the value of the house. However, this doesn’t always work as expected when they later found out that their $10,000 kitchen renovation only increased the value of the house by $4,000. To avoid this, it is important that you consult a real estate agent to help you identify the right investments that can increase the house value.
Getting the House Inspected
Of course, the house inspection is done by a professional hired by the potential buyer. However, to avoid any last-minute unpleasant surprises, I recommend getting a pre-listing home inspection done. This allows you the chance to make any minor repairs before your house goes on the market.
There is nothing worse than finding out later during the potential buyer’s inspection that your house has plumbing issues. This can drastically affect your asking price. Therefore, it is best to be aware of all these issues and get them fixed to have more confidence in your asking price and during the negotiations.
Mortgage Discharge or Penalty
Having a mortgage on the house you are selling means you might get charged with a mortgage penalty for selling the house before the mortgage is paid off. It is essential to get the mortgage cleared before the buyer takes possession.
Majority of traditional lenders, like banks, allows home sellers to apply for the remainder of their mortgage amount to the mortgage on their new house. However, certain conditions apply to this case, including the new house must be purchased within the 90 days after the closing date of your existing house.
Keep in mind that certain mortgages do apply restrictions. In case you aren’t buying a new home and renting one instead, you would most likely have to make the pre-payment penalty. I would suggest you consult your mortgage broker to discuss your options before you put up your house on the market.
Liens against Property’s Title Search
Your lawyer will conduct a title search of your property to ensure there aren’t any liens against it. If you have cleared all the payments and debt before listing the property, you have nothing to worry about. But, if there are liens found against your property, they must be discharged to make the house sale legal.
Paying Utility Bills till the Closing Date
Being the existing homeowner of the house, you have the responsibility to pay all the outstanding utility bills up till the closing date. In case you have made a pre-payment on any of the bills, they will be deductable from the overall cost.
Property tax must also be paid before handing over your house to the buyer. Your lawyer will help you prepare all the documentation and include the payment proof when handing over the title to the buyer to make sure you have no further obligation towards the tax payment and other costs of the property, once the documents are signed.
Paying the Legal Team
Lawyer fees usually vary as per the city and the policy of the law firm. It also depends on the total value of your house. It is best to discuss all the fees and commission, if any, the lawyer will charge you before you officially hire their team. This way, you will be aware of the total cost you would have to pay for the legal services and create the budget, accordingly.
Commission for Real Estate
Real estate fees also vary, depending on the province you reside in. It can be anywhere between 2% to 5%. You will have to pay your agent on the day of the closing. This is typically done by the real estate lawyer you have hired and the amount is taken from the full payment made by the buyer, as per the sale agreement.
Other Indirect Costs
There may be other indirect costs associated with home selling. Typically, these costs are linked with the home preparation you make to increase the value of your house, as mentioned above. While these costs might seem minor at the time, they can quickly add up to a big amount.
Making small changes, fixing odds and ends, buying new plants and more, are typically neglected to be included in the budget by sellers. Moreover, if you have pets, then you should also consider the cost of boarding to make sure your furry friend doesn’t bother potential buyers during the home viewing.
All of these costs must be paid in a timely manner before handing the property to the buyer. Your lawyer can help you in breaking down all these selling costs as per your property. If you live in a condo or townhouse, the costs might also include condo fees and maintenance.
While the seller has to make all the necessary payments up to the closing date, if the closing is not coinciding with the expenses payment due date, then you will have to pay the costs of the partial month. Normally, this doesn’t happen.
Selling your home is a long process and you will need guidance throughout this stage. I am here to help you with all your concerns and questions. Moreover, I will ensure your house is well-prepared to attract the buyers willing to pay a good price. I will not only help in putting your house on the market, and attracting potential buyers, but will also provide my services to help you find your next home. Remember, I have built my business through referrals and I am never too busy to help them out!