Posted by: Karim Ali
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The True Cost of Selling a Home in Ontario
If you’re selling your home in Ontario, it’s essential to understand the costs involved. It’s not just about finding a buyer—there are several fees and expenses you need to budget for. In this guide, we’ll break down the most common costs and provide tips to ensure you’re fully prepared.
Est. reading time: 4 mins
Summary of Total Costs
For an average-priced home in Ottawa (about $690,000), you should budget for:
- Real Estate Commission: 4-5% of the sale price ($27,600 to $34,500, plus HST).
- Other Closing Costs: $4,000 to $5,000, including legal fees, mortgage discharge, and more.
In total, expect to spend about 5.5% to 6% of the final sale price on closing costs.
1. Real Estate Commission Fees
When selling a home in Ottawa or anywhere in Ontario, real estate commissions are one of the most significant costs you’ll face. You should budget about 4-5% of the sale price in commissions when working with most full-service real estate agencies. In Ottawa, for example, if you’re selling an average-priced home of about $690,000, this means around $27,600 to $34,500 in commission fees (plus HST).
These fees are usually split between the listing agent and the buyer’s agent. While some sellers might try to go the “for sale by owner” route, hiring a professional real estate agent generally leads to a quicker sale and higher price, which can justify the commission cost.
If you want to avoid real estate commission fees, there are a few alternative options, such as For Sale By Owner, Discount Brokerages or Flat-Fee Listing Services. These are for another blog post, however! Don’t hesitate to reach out for more info in the meantime.
2. Legal Fees
Selling a home requires a real estate lawyer to handle the legal aspects, including reviewing the sale agreement, managing the transfer of funds, and handling the deed transfer. The cost for a lawyer typically ranges from $800 to $1,500 (plus HST). Be sure to budget for this and find a reputable real estate lawyer to avoid any legal hiccups during the sale.
3. Mortgage Discharge Fees and Prepayment Penalties
If you still have a mortgage on your property, you’ll need to pay a mortgage discharge fee to remove the mortgage from the title. This can cost anywhere from $200 to $500, depending on your lender.
Additionally, if you’re paying off your mortgage before the end of the term, you could face a prepayment penalty. The amount varies depending on your mortgage agreement. Most often, it’s either three months’ interest or an Interest Rate Differential (IRD)—whichever is higher. Be sure to check your mortgage terms so you know what to expect.
4. Home Staging Costs
Staging your home can make a big difference in how quickly it sells and for how much. Professional home staging typically costs between $1,000 and $3,000, depending on the size of your home and how much staging is required. This includes things like renting furniture and decorations to make the space more appealing to buyers.
While it’s an upfront cost, staging can lead to higher offers, so it’s worth considering. In competitive markets, well-staged homes tend to sell faster and closer to the asking price.
5. Repairs and Renovations
Before listing your property, you might need to take care of minor repairs or even invest in some cosmetic upgrades. This could involve fixing leaky faucets, repairing broken appliances, or repainting walls. The cost can vary significantly depending on what your home needs but could range from a few hundred dollars to several thousand.
These repairs may seem small, but they can have a significant impact on how your home is perceived by buyers, and in some cases, they can even increase the sale price.
6. Property Taxes (Prorated)
In Ontario, property taxes are typically paid in advance for the year. If you’ve already paid for the full year, the buyer will reimburse you for the portion of the year they’ll own the home. If you owe taxes at the time of the sale, you’ll need to settle up before closing. This is called a prorated tax adjustment, and while it’s not technically a cost, it’s an amount you’ll need to consider.
7. Moving Costs
Don’t forget to budget for moving costs. Whether you’re moving across town or across the province, you’ll need to pay for a moving truck or professional movers. Depending on the distance and the amount of stuff you have, this can cost between $500 to $2,000 or more.
8. Utilities and Closing Costs
You’ll need to ensure that all utility bills are paid up to the closing date. Any final balances on water, gas, electricity, or other services need to be settled before the sale is finalized. Depending on the property and your usage, these can vary but should be considered when planning for closing day.
9. Title Insurance (Optional)
Title insurance is often recommended but not mandatory when selling a property. It protects both the buyer and seller from potential title disputes or legal issues after the sale. The cost for this is around $250 to $400. While it’s an optional cost, it’s worth considering for added peace of mind.
10. Capital Gains Tax (If Applicable)
If the property you’re selling is not your principal residence—for example, if it’s a rental property or a cottage—you might need to pay capital gains tax on the profit. The taxable amount is 50% of the profit, and it will be added to your income for the year. The rate you pay depends on your income bracket.
If you’re selling your primary residence, you won’t need to worry about capital gains tax, but this is crucial information for those selling investment properties.
Bonus tips
1
Prepare Early
The earlier you start preparing for the sale, the more smoothly the process will go. From staging to repairs, handling these things early can help you avoid last-minute stress.
2
Time Your Sale Strategically
The real estate market fluctuates throughout the year, with spring and early fall often being the most active times. If you’re flexible, try to list your home when the market is more competitive to potentially sell faster and at a higher price.
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