The True Cost of Selling a House in Canada

Don’t underestimate the cost of selling your home.  Listing a home on the market through real estate agents requires time, money, and a lot of personal energy. 

First there’s cleaning your house, completing repairs, paying for an inspection, and packing up your belongings.  Next you’ll stage and depersonalize your home with photo-perfect furniture and décor. Once your home is on the MLS, you’ll be subject to a deluge of emails, text messages, and phone calls from prospective buyers or your listing agent.  Then you’ll take time out of your schedule for open houses, walkthroughs, and price negotiations.  Then, you’ll pay closing fees—including real estate lawyer fees—and sales tax on your new home. Lastly, you’ll experience the joys of moving and managing a closing date.

The entire process from listing to closing takes 90 days on average, but some properties sit on the market for much longer.

Selling through a listing service may help you maximize your selling price, but the sales process requires serious time and effort.  Most buyers have no idea of the real costs involved or how long this entire process takes.  This post adds up the numbers to show you the real cost of selling your home by listing in Canada.

Paying The Realtors

Unless you’re selling privately, you’ll pay realtors a 2 to 5 percent commission fee, typically split evenly between the buyer’s agent and seller’s agent.  Realtors charge for their expertise in understanding value, marketing for maximum impact, and most importantly – their negotiation skills.  A good negotiator on your side will net you thousands of dollars, often making the real estate agent commissions worthwhile, unless you’re in a hurry to sell.

On a home with a $500,000 purchase price, real estate commissions will cost between $10,000 to $25,000.

Real Estate Lawyers & Legal Fees

Once you receive an Offer to Purchase, you’ll want to hire a real estate lawyer to oversee the transaction and avoid making a mistake selling your most valuable asset.  As a seller, your lawyer will ensure your title is in good standing, your contract is flawless, and that all of your filings are completed according to your provincial laws.

Legal or notary fees that protect and oversee the sale of your home will cost around $1,000.

If you’re also buying a new home, budget an additional $1,500 to $2,000 to oversee the purchase, title search and title transfer.

How Much Does It Cost To List?

Getting a home ready to market takes serious preparation.  Here’s what you can expect to pay to list your home on the MLS.

Cleaning Services

Step one is deep cleaning your house.  A professional cleaning will help you get postcard-perfect photos and avoid scaring off buyers with unsightly dust, grime, and clutter.

For a 2,000 square foot home, cleaning will cost between $350 to $600.

Repairs

If your house needs major repairs, it can take months of work and easily cost you thousands or tens of thousands of dollars.  Then there’s the cost of waiting.  In busy housing markets like Kelowna, BC, it can take months to line up professional contractors.

Most homeowners budget 1 to 3 percent of their home’s value for repairs each year.  For a $500,000 home, expect a repair bill around $10,000.

Home Inspection

Before listing your home on the MLS you’ll need to pay for a home inspection to check the condition of the roof, gutters, plumbing, electrical systems, doors, windows, walls, and foundation.

Depending on the size of your home, an inspection will cost between $400 to $800.

Condo Status Certificates

If you’re selling a condominium unit, you’ll need to obtain a Status Certificate – also known as an Estoppel Certificate (AB), or Information Certificate (BC).  This lengthy document includes information about the building’s legal and financial status, bylaws, building rules, and the condo owner’s financial obligations.

A condo certificate usually costs $100 and processing takes one or two weeks.

Staging Your Home

Staging is the process of decorating, organizing, and furnishing your living spaces to increase your home’s perceived value.  A home stager brings in plants, area rugs, mirrors, lighting, art, and furniture that maximize impact.

Home staging can cut your selling time in half and boost your selling price by up to 20 percent, so it’s usually a worthwhile investment.  Some agencies include the staging cost in their commission fee.  Otherwise professional staging services take about 14 days and will cost between $2,000 to $5,000.

Nowadays, some real estate firms offer virtual tours and AI home staging that lets you skip this step completely.

Quick Sale Discount

If you’re in a hurry to move, you’ll probably need to discount your asking price.  A typical discount for a fast property sale is 3 to 5 percent.  On a $500,000 property, this will cost around $20,000.

Mortgage Discharge Fee

If you end your mortgage early, you’ll pay a mortgage discharge fee.  This fee covers the bank’s administrative cost to remove the mortgage from your property title before the mortgage term ends.

Mortgage discharge fees cost up to $300 depending on your financial institution.

Mortgage Prepayment Penalties

While a standard mortgage discharge fee covers administrative costs, it does not account for mortgage prepayment penalties. If home sellers break a closed mortgage contract before the end of its term, Canadian lenders levy a mortgage penalty.

For fixed-rate mortgages, this fee is typically the greater of three months’ interest or the Interest Rate Differential (IRD). Depending on the principal balance and the gap between the contract rate and current market rates, prepayment penalties routinely range from $10,000 to $30,000. Sellers must request a payout statement from their lender prior to listing to determine this exact cost.

Capital Gains Tax

If you’ve profited on your home sale, the amount you earn (the difference between the home’s sale price and the price you paid originally) is referred to as a capital gain.

The capital gains inclusion rate is 50% for individuals, corporations, and trusts. This means that one-half of a capital gain is included in taxable income. Your capital gains tax rate will vary depending on your income bracket, and should be included with your tax return in the year that you sell.

If you’re selling a primary residence, you won’t have to pay tax on your capital gain.  Your home is considered a primary residence if you’ve lived there for each month of ownership; in other words, you were not renting the place out or using the property as an investment vehicle.  In Canada, this is known as a principal residence exemption. When in doubt, seek professional advice from a tax accountant like a CPA.

British Columbia Home Flipping Tax

Sellers transacting in British Columbia must account for the provincial home flipping tax. If a property is sold within 365 days of its purchase, the profit is subject to a 20% tax. This rate gradually declines on a prorated basis for properties sold between 366 and 730 days of ownership. This provincial tax is assessed independently of federal income or capital gains taxes.

Land Transfer Tax

If it’s your first home sale you’ll be pleased to know that land transfer taxes, which cost around $8,000, are always paid for by the buyer.  But if you’re moving into a new home, you’ll want to make room in the budget to pay your own land transfer tax.

Strata Special Levies

For sellers of condominium or strata units, unresolved special levies represent a hidden closing cost. If the strata corporation has passed a resolution for a special levy (e.g., roof replacement or building envelope repairs) prior to the completion date, the seller is typically legally obligated to pay the levy in full from the proceeds of the sale, even if the work has not yet commenced or the payments were originally scheduled in installments.

Moving Expenses

If you do it yourself, moving is probably the worst aspect of selling your home.  It’s time consuming, laborious, and won’t necessarily be a positive bonding experience.

Hiring a reputable, professional moving team can prevent a ton of stress.  Career movers know how to handle furniture without damaging your walls and door frames, and will make sure your delicate items arrive in good condition.  Some movers assist with packing, disassembly, and unpacking so you can stay focused on work and avoid the heavy lifting.

Depending on the size of your home, moving locally will cost between $1,000 to $3,000.  If you’re moving between cities, expect to pay closer to $6,000 to $8,000.  And if you’re moving across Canada – say from Vancouver to Toronto – it will cost you between $10,000 to $20,000.

Outstanding Property Taxes

One of the financial responsibilities sellers often put to the wayside are outstanding property taxes for the year in which they move. To fix this, real estate lawyers use a statement of adjustments to proportionally divide the annual tax bill based on the exact days each party owns the home. This split ensures the seller pays for the days up until closing, while the buyer takes over financial responsibility starting on the possession date.

The Cost of Inconvenience

Selling a home can feel like taking on a second job in a brand new field.  Taking time to sell your home disrupts your work and social life for months on end.  It takes an average of 12 home showings to sell through a conventional listing, and 30 percent of your potential buyers will back out.  While your home is listed, you’ll have to keep it show-ready for open houses and short-notice showings.

Selling on the MLS means you have almost no control over the timeline.  On top of that, you’ll deal with the stress of no shows, insulting offers, and the uncertain wait for the buyer’s financing approval.

Adding Up The Costs

It costs serious dough to list and sell your home in Canada.  You’ll need to hire cleaners, repairmen, inspectors, inspection.  Then you’ll stage the home, find a buyer, and let realtors, lawyers, and bankers bite into your revenue. Finally, you’ll hire a team to help you move.

Factoring in all of your expenses, the total cost of moving in Canada can be as high as $60,000.

Keep in mind that expenses like cleaning, staging, and hiring an experienced negotiator will increase your revenue and offset some of these selling costs. 

Nonetheless, our selling expense estimate of ~$50,000 means parting ways with a serious chunk of change.

Fortunately, there’s a much faster, easier, and less costly way to sell your home – directly to an investor.  Cash buyers will purchase your home in its current condition in as few as 7 to 10 days.  

There are many benefits of selling your home for cash.  You’ll save time, lower your expenses, reduce your stress, and be able to focus on your own life.

Cash Offer Canada is a registered home buyer that charges a flat rate fee of $6,500 per sale.  If you’re in one of our Canadian locations, we’ll provide an instant cash offer on your home pending our inspection.  To find out more and to get a cash offer for your home, please contact us today.