As a homeowner, you paid closing costs before taking possession of your property. Now that you’re preparing to sell, there’s a different set of expenses you’ll have to cover. The good news is, knowing what they are will allow you to budget well in advance.
If you’re looking to prepare for (and take the stress out of) your home sale, understanding the full financial picture is key. Here are the costs of selling a home you can expect…
It’s the most significant expense that will likely fall to you during your home sale. As the seller, you’ll be responsible for covering the commission for both your agent and the buyer’s. The amount will be calculated as a relatively small percentage of your purchase price, which is then split between the two professionals.
Commission rates can vary from one agent to the next depending on various factors, including the level of service provided. It’s worth noting that you’ll only pay for a successful result—so if you don’t sell your property, you won’t pay commission.
Most homes could use a bit of care and a few thoughtful preparations before going on the market. Fortunately, a skilled, service-oriented agent will typically provide complimentary staging—and advice on everything from decluttering to boosting curb appeal.
To maximize your return, your real estate professional may also suggest a few minor repairs (such as tackling a leaky faucet), some landscaping improvements, and other updates. These may come at an additional cost. On the bright side, your agent will likely have connections to trusted professionals who can help.
Some home sellers opt for a pre-listing inspection, which occurs before a home goes on the market. Having a professional assess your property and provide a written report will allow you to take care of any potential issues—before they can impact your sale. It can also encourage buyers to feel confident in the quality of your home, which is especially important if they’re thinking of forgoing their inspection condition.
While the cost can vary from one inspector to the next, you can expect to pay a few hundred dollars if you go this route. Your agent can help you determine whether a pre-listing inspection is right for you.
Mortgage discharge fee
Are you planning to sell your home before the end of your mortgage period? If so, you may have to pay a penalty. The amount will depend on the type of mortgage you have and how early you plan to close it.
As a rule, you can expect your penalty to be higher if you have a fixed-rate mortgage. If it’s going to be very steep, you might want to consider transferring your agreement to your new home instead.
Like home buyers, sellers can expect to pay legal fees as a closing cost. The sum will typically be at least a few hundred dollars, and is typically upwards of a thousand.
It’s also not uncommon for buyers to ask sellers to pay part or all of their closing costs as part of the deal. Depending on how good the offer is, doing so might be worth your while!
Capital gains tax
When you sell a piece of property or investment and make a profit on it, it’s considered a capital gain. The money you’ll make when you sell your home falls under this umbrella. A total of 50 per cent of your property’s value will be taxable at your marginal rate.
Selling a home is complex, but knowing what to expect can help ensure that the process goes smoothly. Getting in touch with an experienced local agent is the first step.
Are you preparing to put your home on the market? Have questions about the costs of selling a home? Reach out to learn how I provide a simple and successful selling experience!