When the time comes to sell your property in Canada, the process is relatively straightforward. Only the costs might make you baulk…

Find a realtor or do it yourself?

Although there’s no legal obligation to use a real estate agent, there are clearly advantages to having someone to do the leg work and negotiating for you. Their expertise should also result in a faster sale at a better price. They will also:

  • Recommend the best time to sell
  • List your home on various websites for you (and make the listings look professional)
  • Suggest ways you can increase the value of your home before you sell it
  • Arrange all the showings and open houses
  • Deal with the paperwork

Whether that’s worth shelling out 3%- 7% of the sale price of your house for is for you to decide.

Private sales

If you do decide to sell privately without an agent, bear in mind that you will probably still have to settle the fees (typically 2.5%) of your buyer’s real estate agent. If you do decide to sell yourself, get an appraisal of your home’s value and, of course, you’ll still need a lawyer to prepare the paperwork.

You can advertise your home for sale on property websites quite easily although you may want to commission professional photographs.

Appointing a real estate agent

Personal recommendation from someone who has used a particular agent is a big plus. So too is finding someone familiar with the neighbourhood.

When appointing an agent, you’ll not only need to agree the fees, but the contract length (how long you’re going to give them to sell the house before you give up and ask someone else to have a go) and whether the contract is exclusive to that agent or not.

Preparing to sell

Of course, you’ll need to get all your paperwork together –deeds, surveys, work contracts, warranties and the like. To get the best price – especially if the market is weak – it often pays to dress your home to help it look its best. Remove the clutter and put it in storage, add a fresh coat of paint to the walls, fix things that are broken, then possibly realise your place wasn’t so bad after all and decide not to sell.

The lawyer

Spend time finding a lawyer you trust and can get on with – especially if you are selling privately. The lawyer draws up the agreement, holds the deposit, and makes sure the transaction runs smoothly and lawfully.

Marketing channels

Listing your home on the various property websites is a must these days, but the traditional sign on the lawn is also worth doing to give your home a neighbourhood word-of-mouth boost.

The costs of selling your home

Real estate agents’ commissions: These vary depending on your location and how good your negotiation skills are (if they’re that good, perhaps you don’t need an agent) but typically range from 3% to 7%. These are shared between your agent and the buyer’s. Let’s make the example easy by choosing Vancouver where the average house price is around $1 million: you’d have to stump up between $30,000 and $70,000 in commissions (plus sales tax).
Legal fees: Say, $600 to $1,000 including the various disbursements.
Home staging: Difficult to generalise on costs – depends what needs doing.
Mortgage: if the property has a mortgage on it and you’re not transferring it elsewhere, the bank might charge you $300 to discharge it. If you have a ‘closed mortgage’, you’ve essentially committed to keep the loan for the entire term of the mortgage and the bank will penalise you with a break fee – typically the equivalent of three months of interest on your mortgage.
Capital gains tax: If it’s not your primary residence but an income property, you’ll have to pay tax at your marginal income tax rate on half of any capital gains you’ve made.
Moving costs: Don’t forget to budget for moving out of your home.

Non-resident capital gains tax

If you’re a non-resident, you need to look carefully into the withholding tax position. Because you are a non-resident, the Canada Revenue Agency (CRA) wants to minimise the risk of you not giving it the capital gains tax that will be due from the sale. By default, it requires the buyer to withhold 25% (in some cases 50%) of the sale price from the sum they pay to you. This can be avoided by applying for a ‘certificate of compliance’ which obliges the buyer to withhold 25% of the net capital gain rather than the sale price. Your lawyer will understand.

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