Real Estate Fees to Expect When Buying or Selling a Home

Most people have heard the saying “money makes the world go ’round.” Nowhere is that more true than when it comes to the real estate market. Whether you plan to buy or sell a home, there is a myriad of real estate fees involved.

Since a realistic budget is paramount to your plans, it’s important to know what you’re up against when it comes to all of the real estate fees you will pay throughout the course of your transaction. In this post, we’ll help you calculate your closing costs.

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What Are Real Estate Fees in Ontario When Selling a House?

Real estate fees in Ontario could mean everything from Realtor® commissions and pre-listing inspections to utility setups and land transfer taxes. Buyers and sellers each have a separate set of costs. However, there is often some overlap between them, especially as moving often requires both a sale and a purchase.

Selling a home generally results in a positive return, but there is a significant investment in getting there. Before your listing goes on the market, you’ll likely want to make a few repairs and updates to appeal to potential buyers. Even if all you do is arrange for professional painting or landscaping, there is a definite cost involved.

Once your transaction closes, there will also be lawyer fees, mortgage penalties (if you break your term early), as well as a host of moving expenses. Every home is priced differently, and every homeowner decides how much time and money they want to invest in updates.

Since there are so many varying factors, it’s impossible to provide an exact dollar amount as to how much it will cost to sell a home. Overall, experts recommend setting aside at least 5% to cover all related fees and expenses comfortably.

As a seller, real estate commissions will likely be your biggest closing cost. A discount brokerage might charge approximately 3.5% while a full-service brokerage typically requires 5%. Either number might seem high, until you realize that the seller’s brokerage is also responsible for paying commission to the buyer’s brokerage.

Looking for advice on how to get the best results from your home sale? The resources below will give you a solid foundation:

Who Pays Realtor® Fees?

We often hear the question “do buyers pay Realtor fees?” For the most part, buyers don’t pay Realtor® fees in Ontario. That doesn’t mean they’re off the hook, however. You’ll still have your share of lawyer fees when buying a house. Plus, there’s property tax and utility adjustments, appraisal fees, and moving expenses. Buyers must also factor in mortgage insurance (if applicable), title insurance, and potentially home inspection costs unless otherwise stated in the Agreement of Purchase and Sale.

Provincial land transfer taxes are by far the most significant of your closing costs when buying a house in Ontario. The tiered percentage increases based on the price of the property. The breakdown works out like this:

0.5% on the first $55,000
1% from $55,000 to $250,000
1.5% from $250,000 up to and including $400,000
2% from $400,000 to $2 million
2.5% on any amount exceeding $2,000,000

How does that work on a real estate transaction in Peterborough? Imagine you’ve purchased a home worth $1 million. Based on the tiered amounts above, the closing cost calculation is $275+$1,950+$2,250+$12,000 for a final land transfer tax of $16,475.

If that seems like a lot, just be glad you chose to buy your home in Peterborough rather than Toronto, where a municipal land transfer tax would have doubled your cost to $32,950!

Are you getting ready for your next house hunt? The posts below will help you become an informed buyer:

Should You Choose a Discount Real Estate Brokerage or a Full-Service Brokerage?

If you’ve ever sold a home, you may have grumbled to yourself “how much do real estate agents make, anyway?” With commissions up to 5% of the final price, the sentiment is perfectly understandable!

It’s also why some home sellers are turning to discount real estate brokerages in an attempt to save on real estate commissions. On paper, this can be effective. If your house sells for $1 million, you only pay $10,000 rather than $50,000.

Basic services include posting your listing on the MLS® and Realtor.ca, as well as some generic guidance on how to sell your property. Beyond that, you’re left to handle the bulk of the marketing tasks, home preparations, showings, and negotiations yourself.

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The Value of Done-For-You Real Estate Services

The problem with selling on your own or even with a discount real estate brokerage is that you’ll never know how much you missed out on. Keep in mind that many real estate brokerages and agents invest their own funds up front to prepare a house based on the latest market trends.

They also invest heavily in professional photography and videography, online advertising costs, and networking events to bring your listing to the attention of as many buyers as possible.

Selling a home is a serious undertaking. It’s far more involved than most people realize, and transactions are almost always less profitable.

Think back to that million-dollar home where you pocketed $990,000 after paying a 1% commission to a discount real estate brokerage. Now imagine that, with strategic updates and stellar negotiation, a full-service real estate team adds $50,000 to your final selling price.

Your 5% commission is now $52,500. Subtract that from your total, and you end up with $997,500. In other words, you’ve increased your earnings by $7,500.

More importantly, you’ve had the support and guidance of expert professionals who personally invested in your transaction. If a seamless and even enjoyable experience is your preference, then a full-service real estate brokerage may be the better path.

Are you ready to buy or sell a home in Peterborough or Kawartha Lakes? Our Peterborough real estate agents can help you make the most of your move. Reach out to team@jeffandkatie.ca or call 705-243-9797 to start the conversation today.