Closing Costs when Selling a House

It is a common believe, that selling house is a complex and stressful process. I will show you one way of how we can prevent all that stress! Our job, as Realtors, is to make the process of selling a house as simple as possible, for our clients. The secret of preventing the stress is to "expect the unexpected". When listing a home for sale, I always introduce ALL closing costs, including the ones that most likely wont apply to that specific home, but rather, just in case... You never really know if the Seller will be hit with certain expense or not. That way, the Seller is aware of all potential closing costs, so, once they see the number, they wont get upset again. I always give the "worst case scenario" so, if all money is used, it is what was expected; and if there are any money leftover, the Seller will be happy, maybe even go on vacation! :)

So, first of all, lets explain what are the "closing costs". Closing costs are expenses that the Seller will be responsible for, during the property selling process. Each time you sell a house, you will have following costs:

• Agents commissions
• Lawyers fee
• Mortgage discharge and accompanying fees (if applicable)
• Mortgage penalties (if applicable)
• Property Adjustments (if applicable)
• Moving costs

Now, lets put some dollar signs to the above list.

• Agents commission - negotiable, but please note that the Seller is responsible for paying BOTH sales representatives (buyer’s and seller's). Also, remember that there is an HST charge on top of the commission. 
• Lawyers fee - should be in the range of $800-$1000. - Please note that that sum is ONLY for their fee! Most of the time, there will be some other charges like photocopying, mailing etc. Therefore, please make sure you ask for a TOTAL amount, when planning for your expenses.
• Mortgage discharge and fees - depends on how many mortgages are there, so unfortunately, I can't give you a specific number. But, i.e., if you have only one mortgage discharge, the amount for discharge shouldn't be more than $150. (That is a generous number, should be lower than that!, but again, depends on the lawyer you choose).
• Mortgage Penalties – if you have mortgage balance on your house, please make sure that you contact your mortgage lender and ask if and how much would be penalties, for you breaking up the contract. Sometimes banks are nice to Sellers, if the Seller is purchasing another property and sometimes are NOT. So, please do not rely on that, but rather call them and make sure you have in writing from the lender,  that will confirm your penalty amount. Those penalties can end up being Thousands of dollars and unpleasant & unexpected expense! (I’ve seen as high as $17,000 requested penalties for breaking up the fixed mortgage and as low as $1,200 for variable mortgage. It all depends on the mortgage amount, term length, the lender etc). That is one more reason why you SHOULD get all information BEFORE you even call a Realtor for Market Evaluation.
• Property Tax Adjustments – sometimes there are property tax adjustments, but that amount is not substantial. Usually few hundreds that will be adjusted on closing, from the Purchase amount.
• Moving costs – depending if you are hiring company to organize your belongings, to move and unpack the belongings in your new home (there are some amazing companies specializing in these kind of services-let me know if you need their info :)), or you will move personally your stuff, the amount will vary from few hundreds, to few thousands.

To sum up, beside from the agents commissions and mortgage penalties, you are looking from $1,300 to around $1700 for lawyer’s fees (including the mortgage discharge).

If you would like to know how much EXCACTELY, you will be responsible for, as a Seller or, if you need some clarification, feel free to contact me anytime and I will gladly do calculations for your property.