Costs of selling

How much money will you keep after your home is sold

It costs money to sell anything, so there is always a difference between the selling price and how much money you actually have when the dust settles.

Before you accept any offer to sell, you should be aware of these costs. Some are more or less fixed but most require investigation. It's best to do it well before the negotiation process begins. Here is a brief rundown of what you need to know.

Mortgage

If you have a mortgage on the property, do you know exactly how much you owe? Unless it is a transferable mortgage, the principal becomes due and payable when you sell and you may need to re-negotiate a new mortgage for your next property.

Pre-payment Privilege

Unless your mortgage is fully open, or transferable, or happens to come due on the day of closing your sale, you will probably be liable for a significant early payment fee to your lender. Typically, this amounts to three full months payment, which is sinful enough but it can be even more. There used to be a limit of what the banks could charge if a mortgage was insured by CMHC, but not any more. The banks can now charge whatever they want - even if the limit was in place when you got the mortgage. Check with your mortgage lender now and find out specifically what your pre-payment privilege will cost. Sometimes, if they want your business, they will negotiate, and it's better for you to do that when you're not under pressure to complete a sale you've already agreed to.

Legal Expenses

There are many legal twists and turns in the transfer of ownership process and virtually everyone uses a lawyer to handle it. The Vendor's lawyer doesn't have to do as much as the Purchaser's lawyer, but you can expect costs typically to run around $500 to $600 barring unusual circumstances. If you don't have a regular lawyer it's best to shop early and find one you are comfortable with. Remember, the cheapest ones are not always the best.

Brokerage Fee

You already know all about that because you've read the page on Brokerage Fees. The fee is based on the final agreed selling price, unless you have made other arrangements. One thing to remember, the government charges GST on the brokerage fee (we were shocked when they didn't scrap it like they promised to). So if the fee is 6%, calculate it as 6.3%, it's Brian Mulroney's legacy to the nation.

GST

So far, GST does not normally apply to the re-sale of private residences. However, if you are not living in the house and it is generating income, or if you have been using the property as a business there may be GST implications. Consult a tax lawyer or accountant. If it's a complex situation or a gray area, consult both, and get them to put their answers in writing.

Taxes

Fortunately you don't have to pay Land Transfer Tax when selling, but if there is any outstanding property tax, that will be deducted first before anything else is paid, including the mortgage.

Outstanding Liens

Any outstanding debts that are registered on title must be paid before you get your money. Even if the debt has been paid, the lien does not disappear automatically, it must be removed. If you are in doubt, have the title searched for old liens, it could save a lot of headaches later.

Survey

You do not need a survey to sell, the Purchaser usually needs it for financing and will ask you to provide one. If you agree and then can't find yours, or it is out of date or otherwise unacceptable to the bank, a new one could cost at least $500. Do not agree to provide a survey unless you know it is good or you are willing to pay the price.