Selling your home doesn’t mean you’ll get the sale price of your property (it would be nice though if the numbers lined up cleanly and nicely like that). If you’re planning to sell your home, there are potential closing costs when selling a home in BC.
It was quite the bitter pill to swallow when I was selling my home because I did not get the municipality listed price for my condo. This is why I now believe that liquid net worth is a measure of true net worth. I was attached to that assessed value number, thinking I should at least get ‘assessed value’.
I even told myself this even as it was a down market and assessed value numbers come out in the summer. After a few weeks on the market and zero offers, I continued to lower my expectations and lower my head to the ground with more objectivity.
Friends kept telling me “maybe you should rent it out and take it off the real estate market”– I’m glad I didn’t do that, lol!
This was my new mantra I kept telling myself:
Your home is only worth what someone is willing to pay for it.
However, I’m glad that I sold my first condo it when I did. This was before COVID-19 hit and all the real estate buying and selling became much more complicated.
On top of the blow that I couldn’t get my ‘assessed value’ price…I knew that the closing costs were going to eat away at the bottom line but I decided to add a few extras in to make the condo more palatable to potential buyers. I paid for a fresh coat of paint and also new blinds to replace the dated, dusty, and disgusting venetian blinds. I also decided to pay almost $3000 to stage the condo. Staging the home was probably the most ‘worth it’ additional cost I incurred though.
Nonetheless real estate in particular Canadian cities does seem like the way to get rich in Canada.
Anyway, here are the closing costs when selling a home in BC:
Table of Contents
What Are Closing Costs When Selling?
First, what are closing costs?
Finder.com states that closing costs are additional costs that the buyer and seller of real estate incur, on top of the selling price of the property.
In British Columbia, the average home sale price is between $675,000 to $700,000 and the average closing costs are $21,000 with a range between $14,000 and $28,000.
Opendoor.com states that sellers pay anywhere on average between 1-3% of the property’s sale price towards closing costs.
Here are some of the closing costs that I forked out when selling a home in BC. There are closing costs to pay such as property transfer tax (PTT) when you’re buying a home in British Columbia, but this post covers costs when you are selling a home. Yes, you get dinged both times, when you’re buying and selling.
Notary or Lawyer Fees For Selling a House in BC
Yes, there are definitely legal fees for selling a house in BC.
One of the main closing costs when you sell a home in BC are the notary, lawyer, or legal fees to prepare your home sale disbursement package.
This varies and can cost between $800-$2000. I personally used a notary public as it is more economical than using a lawyer. In British Columbia, there is a $20 Society of Notaries Public TAF (Trust Administration Fee) charge. In addition, you have to add GST and PST on top of this, which is 12%.
I called around a couple of recommended notaries and the prices were relatively similar. What I paid for the disbursement package preparation was towards the lower end of this $800 to $2000 range.
They prepare a disbursement package which goes over your strata fees (and what you need to still pay for the month and prorate it for the month). They also prorate the property taxes for the year. The notary or lawyer also contacts your bank to review the mortgage discharge. They also review your land title search and prepare that in the disbursement package.
In addition to the Society of Notaries Public TAF, in Vancouver, there’s a $20 charge from your lawyer or notary public to deal with the Empty Homes Tax declaration (to ensure that it has been lived in for over 185 days of the calendar year), which causes a lot of additional paperwork for your lawyer or notary and hence they have to charge you extra.
When you get your wire transfer or cheque with such a large sum of cash though, it’s kind of a fleeting yet priceless feeling, and it makes the notary and lawyer fees worth it, though, haha.
Realtor Commission Fees
Ahh, realtor commission fees in BC, my utmost favourite topic… it is guaranteed to get me fired up.
Many people don’t realize this, but when you buy a home, the seller of the home pays for your buying realtor commission fees. As the seller, you pay the buyer and selling realtor’s commission fees. The commission paid is agreed upon in the Contract of Purchase and Sale that you and the buyer sign and you have to add 5% GST on top of that.
How much do realtors make in BC?
This isn’t a real estate commissions calculator in BC per se, but you get the gist.
Typically in British Columbia, the realtor commission is typically 7% on the first $100,000 and then 2.5% split between the buying and selling realtor for the remaining balance. The buyer’s agent usually receives 3.125% on the first $100,000 and 1.1625% on the balance. The selling agent (the realtor that you choose) receives
So, if you had a selling (and accepted) offer price of $1,000,000 for your home, the buyer’s agent would receive $3125 ($100,000*3.125%) and $10,462 ($900,000*1.1625%). The seller’s real estate agent would receive $3875 ($100,000*3.875%) and $12,375 ($900,000*1.375%).
Adding all of this together gives you a grand total of $29,837.50, and you add 5% GST which is $31,329.38. $31,329.38 is what you will have to pay as the seller as real estate commissions for both the buyer’s agent and the seller’s agent.
There are other options to reduce the real estate commissions, such as One Percent Realty. It’s a bit no frills and the buyer’s agent usually asks for full commission, but at least you can save on the seller’s agent fee.
Strata Document Fees or Strata Fees
This is applicable if you live in a home that has a strata. The strata documents are usually included in the realtor commission and it costs around $100- $150 or so (they request the documents from your strata).
However, there are additional costs like the strata fee to be paid by the seller for the month (if you haven’t been charged for the strata fee yet). This is organized by your notary public or real estate lawyer.
It pays to read the document or the ‘fine print’ though. Make sure you double check the Seller Statement of Adjustments carefully because they tried to charge me the strata fee when I had already paid for the month. Another strata fee that is part of the closing costs is the Move Out Fee, and the cost is dictated in your strata documents.
Make sure that you don’t pay twice though, if you have moved out prior to listing your home. I had to go over my bank statements to show them that I had paid for the month and paid for the move out fee already.
Mortgage Discharge Fee
If you have a closed mortgage and you are not porting your mortgage, you will have to pay a fee to cancel your mortgage. If you have an open mortgage (and pay the penalty of a higher interest rate like I did for many many months), you will not have to pay the mortgage discharge fee when you sell your home.
I chose an open mortgage a few years ago but paid a much higher interest rate (5.95% ouch), however, it was nice to not have to pay fees related to breaking my mortgage.
After you add all of these closing costs together, and subtract it from your selling price, you finally get your net proceeds from sale of your home.
Here’s a visual calculation:
Selling Price – (mortgage discharge fees + strata document and other fees + real estate commissions + notary or lawyer fees)
= net proceeds from home sale
Other Costs When Selling a Home
There are other costs as mentioned which can eat away at your net proceeds, but these would have been incurred before you sell your home and receive the actual money.
- Staging costs. I paid around $3000 to stage a 1 bedroom condo. It was worth it.
- Painting. I paid $700 to get a fresh coat of paint. This probably didn’t need to be done but it brightened up the place.
- Upgrades to fix. Sometimes during the home inspection, the buyer requests to have things repaired if the repair costs are over a certain amount (it’s in the offer letter).
- Upgrades and renovations. If you choose to get new window coverings or other improvements for the purpose of selling your home, you should include these too.
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Cutting Into the Bottom Line
Well, how much does it cost to sell a house in BC?
All in all, the closing costs such as the notary, realtor, strata document with the additional costs such as staging, painting, and getting new window coverings, this ended up being over 2% of the agreed selling price.
In addition to these costs that cut into your bottom line, although this may be a little ‘overboard’, and some may not agree with these calculations, here’s how to calculate your return on investment (ROI) on your primary residence.
Although there isn’t a cost of selling a house in BC calculator, you’ll be able to calculate the numbers roughly.
The bottom line should be in mind when you are preparing on getting mortgage quotes online, for example.
If you are interested in a more hands off real estate investing route, investing with addy can allow you to be hands off to just collect distributions and collect capital gains.
You might also be interested in:
- Properly review: Buy First and Sell later
- Single Female Home Buyer Tips for your First Condo
- First Home Savings Account
Were you surprised at the closing costs incurred when you sold your home?
Did you use a notary or a lawyer for your closing?
GYM is a 40 something millennial writing about personal finance since 2009 and interested in achieving financial freedom through disciplined saving, dividend and ETF investing, and living a minimalist lifestyle. Before you go, check out my recommendations page of financial tools I use to save and invest money. Don’t forget to subscribe for a free dividend yield spreadsheet and the free Young Money Bootcamp PDF.