Hidden Costs When Selling Your Home

On the surface, selling your property should be a simple calculation: Profit = Selling Price Less Outstanding Mortgage. So when a real estate agents starts sharing the incidental costs when selling your home, it seems almost counter-intuitive.

One of the responsibilities of your real estate agent is to help identify and estimate your individual ‘selling’ costs. And it’s important to get them right and not overlook anything.  Knowing the bottom line is absolutly critical when the proceeds from the sale of your current home is to be down payment on a new property.

THE COST OF SELLING YOUR HOME

REAL ESTATE TRANSACTION COSTS:

A professional REALTOR®, will charge a total commission calculated as a percentage of the purchase price. That amount is divided between the listing agent (the real estate agent that represents you) and the buyer’s agent (the REALTOR representing the buyer). Note that HST is added to the real estate transaction fees.

Selling your home privately is one way to avoid real estate commissions. But before you take that path, considering reading Under the Microscope: A Real Estate Agent’s Day, to see what services a real estate agent provides.

MORTGAGE DISCHARGE FEES:

A visit to your financial institution or mortgage broker will confirm that you can’t just simply switch your mortgage from one real estate property to another. You have to discharge your mortgage on one home and reapply for the new home.

There are differences between open, closed and variable rate mortgages. Penalties can range from 3 months interest or Interest Rate Differential (IRD). Depending on how the lender calculates the penalty, the discharge fee can really vary.

A home equity line of credit secured to a property, might not be subject to a discharge fee but there could be a lender fee.

Each mortgage contract is written up differently lender by lender, so sitting down with your mortgage provider before beginning the process will give you the bottom line in writing.

LAWYER’S FEES:

For uncomplicated real estate transactions, most lawyers have a standard fee that covers a set number real estate tasks such as: discharge to the title of current property; mortgage discharge; buyer title verification and itemizing a list of standard utility charges etc.

Anything beyond that can be subject to additional charges, which your real estate lawyer will clarify with you.

STATUS & INSPECTION CERTIFICATES:

A status certificate may be required in the sale of a condominium to describe the legal and financial health of the condo corporation. Most condo offers-to-purchase include a condition that allows the Buyer’s lawyer to review the documents.

Inspection certificates maybe required in property real estate transactions for wells, septic tanks, water etc.

Your real estate agent will be able to advise you on whether one is needed, the estimated cost and most likely direct you on how to get it done.

UTILITIES AND PROPERTY TAX:

The seller is responsible for paying the property taxes and utilities until closing day. That includes mid-month expenditures and any outstanding amounts due to equalized payments.

All expenses must be current before the lawyer discharges the mortgage and turns over the keys.

PROPERTY EXPENSES:

• Home Inspection: Some sellers elect to purchase a pre-listing home inspection. It gives them the opportunity to fix any issues or factor the cost of repairs into the asking price.
  Having a pre-listing home inspection can also speed-up the negotiation process, saving the buyer time in not having their own home inspection completed.
• Improvements: All properties for sale should be in ‘show ready’ or tip-top shape. That could mean taking care of the small low-cost minor improvements such as: patching and painting walls; fixing damaged flooring; repairing plumbing leaks; replacing light bulbs (with energy efficient bulbs) and updating light fixtures; and keeping the yard and garden neat and tidy.
  Sometimes home sellers get the itch to renovate or up-date. However not all renovations are equal. Before undertaking any project discuss it with your real estate agent to determine whether it will add to the selling price or hasten a quick sale.
• Staging: Certainly if the property is vacant, having it staged will show its full potential. Staging can add value to a home sale, offering new design possibilities the seller hadn’t considered. What staging does mean for the seller is the removal and storage of furniture in an off-site storage locker, an additional expense.
  Your real estate agent will be able to point out the advantages to home-staging your property and provide recommendations to several services.
• Moving: And of course once you sell your house, there are moving expenses which can include hiring movers to boarding the pets.

Thinking of selling your home? Our team would be happy to get your started on a free home evaluation and discuss any of the selling costs.

Our team of real estate sales professionals is committed to finding you, your dream home. Whether you’re looking to buy or sell, the Karen Paul team is here to help with any questions.

Karen Paul & Associates | Real Estate
905-333-6234 | karenpaul.com | info@karenpaul.com
Burlington • Oakville • Hamilton • Milton • Niagara

Credit to posts by Dominion Lending Centres & BREL team