How Much Does It Cost to Sell a House?

How Much Does It Cost to Sell a House?

Principal Residence / Real Estate Taxes / Home Renovations / Real Estate Fees-Commissions

 

Selling a home is a big deal. There is a lot riding on the sale of a home. Often there are moving arts that do not meet the eye and thus a trusted real estate professional should be consulted before doing so.

 

Renovations

To renovate my home or not to? An age old question. Simple math would suggest that if a homeowner spends a dollar on their home to improve it, then the price of the home should go up. 

 

Not all of the time. Studies have proven that money invested in curb appeal, the kitchen and bathrooms, yield the highest return on investment (ROI).

 

Like most things, there is an expensive way to do this and an inexpensive way. Unfortunately, there is no one answer that fits everyone’s situation. 

 

A trusted real estate agent can make life easier by giving direction based on current market conditions in your marketplace.

 

Taxes

Though it’s best to consult your local real estate lawyer, tax expert or accountant, here are a few of the basics. 

 

No! There is no tax to be paid on the sale price of your home if it is your principal residence – a home a Canadian taxpayer or family maintains as its primary residence. 

 

However, if the property you are selling is not that, such as a: vacation home, cottage, real estate used for business, investment property – there is a good chance the sale may be subject to a capital gain tax or HST. 

 

It is strongly advised to contact a professional before selling to understand whether tax will be owed.

 

Municipal Land Transfer Tax

Often confusing, this is a tax that is paid for by the buyer, not the seller. When you acquire land or a beneficial interest in land, you pay land transfer tax to the province when the transaction closes.

 

Note: Some municipalities, like the City of Toronto, charge a secondary land transfer tax

 

Calculating ROI

Property owners who own rental property should consider costs of investing based on annual roi. If you bought a property with the intention of making money on it, like an investment property, depending on your accounting style you’ll want to look at separating principal and interest. 

 

Interest would be an expense that would go against your Roi. Other deductions would be property taxes, maintenance and insurance.

 

Of course the purchase price matters so consult with your buyers agent to make sure you’re paying fair market value. It’s advised to work with a buyers agent that is an expert in the community you’re investing in.

 

Home Maintenance

If a home shows that it is well cared for and loved, the chances of a buyer making an offer earlier in the listing and for more money increase. It’s a Important to keep up with Home Maintenance and home repairs.

 

If you’re unsure of the condition of your home, consider hiring a home inspector. Having a home inspection done is like having home insurance. It safeguards you against any surprises at a later date.

 

 Home styling and Home Decor go a long way as well. I properly styled home can affect home prices. Home staging and decluttering go along way.

 

General Home Maintenance like keeping gutters cleaned from debris and water away from foundations impresses upon the buyer that the home is being well-maintained. It also helps with personal liability should the worst happen and you have to call your insurance company.

 

Government Sales Tax

In Ontario, the provincial government changes HST (Harmonized Sales Tax) on most taxable goods and services. HST almost always applies to and fees for service that a homeowner engages with or needs during the sale process. 

 

Moving expenses, storage costs, legal and real estate fees are all subject to HST based on the amount of the fee for services rendered.

 

Moving Expenses

The shoes does not fit every foot when it comes to moving expenses. The moving industry is mostly unregulated and all companies operate at different standards and with different costs.

 

Variables such as moving distance and the volume of possessions being moved weigh heavily into the cost. Most overs can provide a cost estimate before you start the process.

 

A lot of moving companies even provide boxing and storage services which can add to the cost depending on how much you choose to delegate. 

 

Make sure to consult a professional and trusted real estate agent for a referral or two – after all, the Realtor is dealing with a lot of these companies on an ongoing basis.

 

Legal Fees

Legal fees can vary mainly on what the law firm chooses to charge. Like any service though, you get what you pay for.

 

It is strongly advised to hire a lawyer that specializes in real estate transactions as close to your given area as possible. The amount of moving parts leading up to the closing of a sale would make most people’s heads spin.

 

Proper due diligence by your solicitor can save many headaches and save you thousands, if not tens of thousands of dollars in problems. 

 

Real Estate Fees

Similar to legal fees, real estate fees vary, are not fixed and are based primarily on what the brokerage or agent chooses to charge. Generally speaking the fees are a percentage of the sale price of the home. 

 

Beware of real estate agents that charge too low of a fee but also be aware of realtors that are too expensive. How do you determine what is fair and proper? Ask the real estate professional what you get in exchange for their fee. 

 

What type of marketing and exposure will I get? What communication systems do you have in place that ensure nothing slips through the cracks? 

 

How do I know you have the time to service my needs? Is that agent too busy? Will they market internationally? Ultimately, you get what you pay for. 

 

Flat fee brokerages and hourly rate are rare in Ontario but do exist. 

 

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