Real Estate: Home Closing Costs

Closing costs are not just for buyers! Sellers beware.

It has traditionally been assumed that closing costs are just for home buyers, and that sellers walk away with  a cheque for their home sales price.

Well, let’s dive in and break it down. Please note that these are general guidelines and there can be more fees depending on your individual situation.

Home Buyer Closing Costs:

– Notary or lawyer fees:

Usually the buyer chooses his or her own notary or lawyer to prepare the paperwork, new deeds, mortgage deeds, etc. This cost is always assumed by the buyer unless negotiated in advance but rarely paid for by the seller.

– Adjustments:

Adjustments are paybacks to the seller for pre-paid costs. Municipal taxes, school taxes, condo fees, oil in the oil tank, are some types of pre-paid expenses. For example, municipal taxes run from January 1st to December 31st and are paid for the whole year by the seller. The buyer pays back the seller for the balance. Meaning, if the buyer buys on August 15th, the notary will prepare the adjustment sheet and the buyer will pay back the seller for the municipal tax portion running from August 15th to December 31st.

– Real Estate Fees:

We always see that the seller pays commission, but as laws change and buyers must be represented by realtors in certain markets, they may have to pay a portion of the commission amount for proper representation. 

Home Seller Closing Costs:

– Notary or lawyer fees: 

The notary will have to close off any and all loans against the property, whether they have a balance or not. This means that if you a mortgage and line of credit attached to the home, the closing off of both loans and then publishing them to the registry will incur an unavoidable cost.

– Commission:

Thank you for hiring us and entrusting us with the sale of your home 😀. The notary will withhold the taxable commission amount and will remit the funds to the listing agency.

– Condo management fees:

If you are selling a condo, the notary will contact the board and management to ensure that all condo fees are up to date and ask for other pertinent information for the sale. The boards charge a fee which are then transferred to the sellers.

– Certificate of location:

Another mandatory document. This document must be less than 10 years old and must be valid. It outlines the cadastre number (lot number), square footage, outline of the property as well as any rights of passage or issues with the property. If the certificate of location is not ready for the notary signing date, the notary will charge the seller title insurance to ensure that if any issues do pop up, they are covered with the insurance. Also note, that if you have a house and you build a pool, you will need a new certificate of location for the sale even if your COL is less than 10 years old as it must be representative of the current situation.

There are many other costs associated with buying and selling a home but these are the basic ones that you must know and expect when buying and selling. If you have any questions, we will be glad to answer them.