Buyers hear a lot about land transfer tax, but sellers have their own set of costs, and most people underestimate them. Before you sign a listing agreement, it helps to know exactly where the money goes when your home sells. This article walks through the real costs of selling a home in Ontario, so you can plan for them instead of being surprised at closing.
Commission: The Biggest Line Item
Real estate commission is the largest cost of selling, and it is a percentage of the sale price that is fully negotiable and agreed in writing before you sign the listing agreement. It covers the work of both the listing agent and the buyer's agent, and it is subject to HST. The exact percentage is not a fixed number, and it should never be a mystery: any good Realtor will put it in writing and explain what the fee includes. I go into more detail on what you are actually paying for when you hire a Realtor in this article.
Legal Fees and Disbursements
Your real estate lawyer handles the closing: reviewing the agreement, preparing the transfer, dealing with the title, and paying out the mortgage. Legal fees and disbursements vary, and a good lawyer will quote them upfront before you commit. This is not the place to shop for the cheapest option, because a missed detail in a real estate closing is expensive.
The Mortgage Discharge, and the Penalty People Forget
If you have a mortgage, it has to be paid out at closing, and your lender will charge a discharge fee. If you are on a fixed-rate mortgage, breaking it before the term ends can trigger a prepayment penalty, which can be significant. The number depends entirely on your mortgage, so the right move is to call your lender early and ask exactly what it will cost to pay the mortgage out. Knowing this number before you list changes your planning.
Preparation, Staging and Repairs
Getting a home ready to sell costs something, but how much depends on the home. Light preparation, painting, decluttering and staging can be modest, while a home that needs real repairs carries a bigger bill. The honest approach is to decide based on what the market needs and what the home will return, not on a wish list. Some repairs pay for themselves at sale time and some are a gift to the next owner, and I walk through that math in my article on selling as-is versus fixing up.
Moving, Storage and Carrying Two Homes
Moving costs money, and so does the overlap when you buy before you sell. If you are carrying two homes for a month or two, the mortgage, utilities and insurance on the old home add up quickly. It is not a glamorous cost, but it is a real one, and it is worth building into your plan, especially if you are buying first and selling after.
What You Do Not Pay
Two things are worth knowing because they surprise sellers. First, land transfer tax is paid by the buyer in Ontario, not the seller, so that big number you hear about is not your bill. Second, for most people the sale of their principal residence is exempt from capital gains tax under the federal principal residence exemption. If the home is not your principal residence, the rules are different, and that is a conversation for your accountant or tax professional, not a guess.
Plan the Full Picture Before You List
The way to avoid surprises is simple: get the complete cost picture before you commit. A good Realtor walks you through commission, legal, discharge and prep costs in the first meeting, so you know your net number before the sign goes up. That transparency is part of how I work, and it is one of the reasons sellers who have been through the process once come back for the second sale. If you are buying and want the buyer-side version of this math, my closing costs article covers that side. And if you want to know what selling your home would really cost, start with a conversation.
Thanks, Lee :)