Additional Costs When Selling A Home.
Wednesday Dec 23rd, 2020
So you've lived in your home for several years and finally got it the way you want. But something pops up in your life and now it's time to sell. Over the years you've built a nice little nest egg of euqity and the improvements you've made over time have helped increase the value as well. You may foresee a massive cheque coming your way after you sell -- but not so fast! The costs of selling a home can add up quickly.
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You can expect about 10% or more to be taken out of the proceeds before you get your cheque and cash out. There are a few additional costs when seling that some sellers are not aware of. Below is a List of the hidden fees and cost not talked about a lot of the time in Durham Region.
#1: Lawyer fees
In Durham Region anytime you sell a home you need a reputable real estate lawyer to make sure everything goes as planed. The Real Estate Lawyers will be the ones who divy up the proceeds and pay off lenders, utilities, real estate brokers and clear/discharge the title of your property.
You can expect to pay around $899 for a lawyer’s services. Remember you will also have aditional charges for paperwork discharge fees and administrative costs such as mailling documents and little extras.
#2: Real estate agent fees
If you plan to sell your home through a real estate agent, don’t forget about the cost of real estate agent commissions. These commissions typically range from 3.5% to 7% of the final sale price. Even if you list your home by yourself to enlist a discount listing agent, or negotiate commission, you’ll likely still have to pay for the buyer’s agent in the amount of 3% to 4%, which means you’re not saving as much as you think. Whatever you do don't through your money at high real estate commissions. Durham Region's top low commission sales team does more for less and can save you thousands in commission. Some low commission real estate agents charge as little as 1% Commission listing commission.
If you sell FSBO (for sale by owner), you’ll have to do all of the grunt work by yourself. This includes choosing the right price, hosting open houses, and negotiating with potential buyers. Even then, you’ll want to offer a buyer’s agent commission as encouragement for real estate agents who have eager customers ready to buy.
When determining whether to work with a real estate agent for your listing, consider your time and skill level. Otherwise, you might end up sinking too much time into the property to justify the cost savings.
#3: Mortgage discharge fees
If you are like most people in the GTA you've got a mortage and will need to pay a mortgage penalty if you close the mortage before you sell. If you are planing on buying another home most big bank lenders will allow you to port your mortage for free to another property. Depending on the size of your mortgage, the interest rate and terms you have will come into play when discharging your mortgage. The penalty size and fees vary for every lender, the best way to find out is to call your bank and ask them what your penalty is if you were to pay it off today. A good rule of thumb is 3 months of interest but this is not always the case. Some penalties can be so large it makes it impossible for some sellers to sell before hand! Call your lender and get the payout amount!
Depending on the terms of your mortgage, you may be charged a mortgage prepayment penalty from your lender. While the exact number depends on the number of years left on your loan and the interest rate, the penalty is usually around three month’s worth of interest on your outstanding balance.
Some banks use the interest rate differential if it is higher than the previous option. If you are buying another home, you may be able to transfer your mortgage and avoid prepayment penalties altogether.
#4: Capital gains And Property Taxes
If your home is your primary residence then capital gains won't come into play, however if this is a 2nd home, cottage or rental you can expect to pay additional tax come tax time. This amount is 50% of the profit you'll be taxed on as if it were income. So for example if you made 100,000 on your home, CRA will add 50,000 income onto your income come tax time! Your property taxes will need to be right up to date come closing day even if it's prorated. Check out this land transfer tax calculator from durhamlaywer.ca
#5: Staging your home
After you declutter and get your home spotless for open houses and showings, you may wish to pay someone to stage your home to generate a higher offer price. Some Realtors offer free staging but will charge 5% to 6% commission. If you're a savvy seller the best route would be to contact a discount realtor and work a deal out with them for staging. For example with Durham Regions number one low commission selling team, you can pay 3.5% and they can stage the entire 2500SQFT home for as little as $1000 because they get discounts from top stagers in the industry. Don't fall for the "free staging" realtors that charge crazy commissions!
#6: Home maintenance and general repairs
If you’re selling your home, a little elbow grease goes a long ways. Windows, sinks, floors, baseboards and appliances should all be spotless! Some realtors offer free cleaning when you list with them. Get some flowers at all entrances and landings, decking and landscaping
Real estate agents may recommend certain repairs before even listing your home if they think it will generate a higher sale price as a result. It’s likely a new HVAC system or roof would be a significant selling point to a buyer, as would a fresh coat of neutral paint in a high traffic area. You should have a local Durham Region Realtor come in and do a free home improvment checklist in order to generate a higher offer.
After they’ve submitted an offer and had the home inspected by a professional, a buyer may request some repairs. These may include safety-related maintenance required by their lending company or only repairs they request. You may be able to negotiate which repairs you perform or reduce the final selling price to make up for it.
#7: Moving costs
Hauling your furniture or renting a storage unit is not cheap anymore. Before you plan on selling get your quotes and do your homework! Depending on the KMS and amount of time moving can be an astronomically huge expense. If you want to know what your home would sell for in today's market click here for a FREE MARKET EVALUATION