Selling a home involves several costs beyond just the mortgage payout. Understanding these expenses can help you budget effectively and maximize your net profit. Below is a detailed breakdown of the costs associated with selling a home in Calgary.
1. Real Estate Agent Commission
Real estate agent commissions typically account for the largest expense in selling a home.
Standard Commission Rates in Calgary:
7% on the first $100,000 and 3% on the remaining balance: Commonly split between the listing agent and the buyer's agent (3.5% and 1.5% each).
For example, if your home sells for $500,000, the commission would be $19,000 ($9,500 to each agent).
Tips to Manage Commission Costs:
Negotiate with your agent for a lower rate, particularly if the property is high-value.
Some sellers opt for a flat-fee or discount brokerage service, though this may limit the level of service.
2. Legal Fees
You’ll need a real estate lawyer to handle the paperwork and legal aspects of the sale.
Typical Legal Costs:
$800–$1,500: Includes title transfer, mortgage discharge, and other legal services.
Some lawyers charge additional fees for unexpected complications.
3. Mortgage Discharge Fees
If you still have a mortgage on the property, your lender may charge a fee for breaking or transferring the mortgage.
Types of Fees:
Fixed-Rate Mortgages: Expect a penalty based on the greater of three months' interest or an Interest Rate Differential (IRD).
Variable-Rate Mortgages: Typically, the penalty is three months' interest.
Tips to Minimize Costs:
Check if your mortgage is portable (transferable to another property).
Consult with your lender to understand your specific penalty amount.
4. Staging and Home Preparation Costs
Preparing your home for sale can significantly impact its marketability and final price.
Estimated Costs:
Home Staging: $1,500–$5,000, depending on the size of your home and staging requirements.
Repairs and Upgrades: Minor repairs like painting, fixing faucets, and landscaping can cost $500–$2,000 or more. I’m very handy so I can certainly help you with minor repairs saving you some money.
Cleaning: Professional cleaning services typically cost $200–$500.
5. Closing Costs
Although sellers in Alberta don’t pay many closing costs, there are still a few fees to consider:
Adjustments for Property Taxes and Utilities:
If you’ve prepaid property taxes or utilities, the buyer may reimburse you through closing adjustments.
Conversely, if payments are due, you may need to settle those amounts.
Title Insurance or Transfer Costs:
In some cases, you may need to pay for additional title services. Costs can range from $200–$400.
Real Property Report (RPR) of your property can range from $700-$900
6. Moving Costs
The cost of moving to your next residence should also be factored in.
Estimated Costs:
Local Moves: $500–$2,000, depending on the size of your home and distance.
Cross-Country Moves: Can exceed $10,000.
Tips to Save:
Get quotes from multiple movers.
Declutter before moving to reduce costs.
7. Marketing Expenses (If Selling Privately)
If you decide to sell without an agent, you’ll need to cover marketing costs.
Potential Expenses:
Professional Photography: $200–$500
Video Walkthrough and Drone Videos: $400-$500
RMS Measurements: $200-$400
3D Rendering and Plan Layout: $200-$400
Online Listings: Some platforms charge fees for premium listings.
Signage and Brochures: $50–$300.
8. Capital Gains Tax (If Applicable)
If the home is not your primary residence, you may owe capital gains tax on the profit.
How It’s Calculated:
50% of the Gain is Taxable: For example, if you sell a rental property for $100,000 more than you paid, $50,000 is taxable as income.
Consult a tax professional for advice.
9. Miscellaneous Costs
Home Warranty (Optional): Offering a warranty such as to buyers can make your home more attractive, costing $300–$500.
Utilities: Keep utilities active during the selling process to ensure showings are comfortable.
Example of Total Costs for a $500,000 Sale
Key Takeaways
Selling your home involves several costs, with real estate commission and legal fees being the largest.
Preparing your home and pricing it strategically can maximize your return.
Always consult professionals, including a real estate agent like myself, lawyer, and lender, to understand and manage your selling costs effectively.
