Selling a home is an exciting time—whether you're upgrading to a larger space, downsizing, or embarking on a new chapter in life. However, it's important to be aware of the various costs associated with selling a home in British Columbia. While the sale price may seem like a big win, several expenses can impact your final profit. Let’s break down the key costs you should be prepared for when selling your home.
Home Repairs and Preparation
To maximize the appeal of your home to potential buyers, it’s important to consider the cost of any necessary repairs that could enhance your home’s market value, such as painting, landscaping, or fixing broken appliances. Buyers will either be repelled by repairs or want to negotiate their cost into the purchase price so it’s best to take care of these things ahead of time. These expenses vary depending on the scope of work, but they can significantly impact the speed and value of your sale.
Many sellers also invest in staging. Staging can range from simply re-arranging the items you already have to better showcase your home, to a full professional staging complete with rented furniture. Staging can help showcase your home’s best features and create an inviting atmosphere. A Real Estate Staging Association study shows that staged homes spend 73% less time on the market than homes that have not been staged and 85% of the staged homes in the study sold between 5% and 20% more than the original asking price. Costs for staging services typically range from a few hundred to several thousand, depending on the size and needs of your home. I find that most homes only need some very basic staging that can be done yourself with the guidance of a professional stager. That’s why I cover the cost of a professional staging consultation for all my sellers.
One of the most significant costs when selling a home is the commission paid to your real estate agent. In BC, the seller pays the real estate commission, which is typically split between the listing agent, the listing agent’s brokerage, the buyer’s agent, and the buyer’s agent’s brokerage. The services provided for that commission will vary from realtor to realtor so it’s important to discuss and agree on the terms with your realtor before you sign that listing contract.
Just like when you buy a home, selling a home requires legal assistance. You’ll need a lawyer or notary to handle the paperwork and ensure the transfer of ownership goes smoothly. Legal fees for selling a home generally range between $800 and $1,500, depending on the complexity of the transaction.
If you still have a mortgage on your property, you'll need to account for mortgage discharge fees. These fees vary depending on your lender, but typically range from $150 to $300. However, if you're breaking your mortgage before the term ends (for example, to sell your home before your mortgage is up for renewal), you may also be subject to a prepayment penalty, which can be more substantial. These penalties can be either a percentage of your remaining mortgage balance or an amount equivalent to several months of interest. Make sure to check with your mortgage broker to understand any potential penalties.
Just as when you buy a home, property taxes need to be settled when you sell. If you've already paid your property taxes for the year, you’ll receive a prorated refund for the portion of the year that the new owner will occupy the home. Conversely, if you haven't yet paid, you'll be responsible for covering the taxes owed up until the closing date. This adjustment is typically handled during the closing process and will affect the final amount you receive from the sale.
If the home you're selling is your primary residence, you’re likely exempt from capital gains tax on any profit you make. However, if the property is an investment or secondary home, the profit you make from the sale could be subject to capital gains tax. This tax is calculated on the difference between the sale price and the price you originally paid for the home minus the cost of selling (i.e. real estate commissions). 50% on the first $250,000 of a capital gain, and 66.67% on any portion that exceeds $250,000 is subject to tax at your marginal tax rate. Consult a tax professional to determine whether this applies to your situation and how much you may owe.
Once your home is sold, it’s time to move! Whether you hire professional movers or rent a moving truck, there are costs associated with packing up and relocating. The cost of moving can range from a few hundred dollars for a local move to several thousand dollars for long-distance moves. Don’t forget to account for the cost of packing materials and any storage you might need.
Staging
Many sellers also invest in staging. Staging can range from simply re-arranging the items you already have to better showcase your home, to a full professional staging complete with rented furniture. Staging can help showcase your home’s best features and create an inviting atmosphere. A Real Estate Staging Association study shows that staged homes spend 73% less time on the market than homes that have not been staged and 85% of the staged homes in the study sold between 5% and 20% more than the original asking price. Costs for staging services typically range from a few hundred to several thousand, depending on the size and needs of your home. I find that most homes only need some very basic staging that can be done yourself with the guidance of a professional stager. That’s why I cover the cost of a professional staging consultation for all my sellers.
Your Realtor’s Compensation
One of the most significant costs when selling a home is the commission paid to your real estate agent. In BC, the seller pays the real estate commission, which is typically split between the listing agent, the listing agent’s brokerage, the buyer’s agent, and the buyer’s agent’s brokerage. The services provided for that commission will vary from realtor to realtor so it’s important to discuss and agree on the terms with your realtor before you sign that listing contract.
Legal Fees
Just like when you buy a home, selling a home requires legal assistance. You’ll need a lawyer or notary to handle the paperwork and ensure the transfer of ownership goes smoothly. Legal fees for selling a home generally range between $800 and $1,500, depending on the complexity of the transaction.
Mortgage Discharge Fees
If you still have a mortgage on your property, you'll need to account for mortgage discharge fees. These fees vary depending on your lender, but typically range from $150 to $300. However, if you're breaking your mortgage before the term ends (for example, to sell your home before your mortgage is up for renewal), you may also be subject to a prepayment penalty, which can be more substantial. These penalties can be either a percentage of your remaining mortgage balance or an amount equivalent to several months of interest. Make sure to check with your mortgage broker to understand any potential penalties.
Property Tax Adjustment
Just as when you buy a home, property taxes need to be settled when you sell. If you've already paid your property taxes for the year, you’ll receive a prorated refund for the portion of the year that the new owner will occupy the home. Conversely, if you haven't yet paid, you'll be responsible for covering the taxes owed up until the closing date. This adjustment is typically handled during the closing process and will affect the final amount you receive from the sale.
Capital Gains Tax (If Applicable)
If the home you're selling is your primary residence, you’re likely exempt from capital gains tax on any profit you make. However, if the property is an investment or secondary home, the profit you make from the sale could be subject to capital gains tax. This tax is calculated on the difference between the sale price and the price you originally paid for the home minus the cost of selling (i.e. real estate commissions). 50% on the first $250,000 of a capital gain, and 66.67% on any portion that exceeds $250,000 is subject to tax at your marginal tax rate. Consult a tax professional to determine whether this applies to your situation and how much you may owe.
Moving Costs
Once your home is sold, it’s time to move! Whether you hire professional movers or rent a moving truck, there are costs associated with packing up and relocating. The cost of moving can range from a few hundred dollars for a local move to several thousand dollars for long-distance moves. Don’t forget to account for the cost of packing materials and any storage you might need.
Selling a home in BC comes with various costs that can add up quickly. From agent commissions and legal fees to potential mortgage penalties and staging expenses, it’s important to budget accordingly and be fully aware of what to expect. By planning for these expenses, you’ll be in a much stronger position to maximize your profit and ensure a smooth, successful sale.
Need assistance navigating the home-selling process? Feel free to reach out—I’m here to help you every step of the way!
Need assistance navigating the home-selling process? Feel free to reach out—I’m here to help you every step of the way!