Closing & Other Costs of Selling Homes in Calgary
This page discusses Real Estate transaction costs other companies (and the government) will charge you.
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Non-commission costs you incur during the sale of your property can be considerable and are often overlooked. Below are some things that could cost you money in a Real Estate transaction. Any good Realtor will review your specific situation prior to listing so you will have a good estimate of all the costs involved.
Mortgage Closing Costs
Mortgage Buyout Penalties can in some cases be as much as commissions so it is important to know what to expect prior to listing your property for sale. Open mortgages and most Line of Credit type mortgages do not have penalties to pay them off early, but most traditional mortgages do. The most common penalty calculation here in Alberta is the greater of:
- 3 Month’s Interest These are typically found on variable rate mortgages and are relatively easy to calculate. or..
- Interest Differential This is the difference in interest rate between your rate and the current rate they can sell the remainder of the mortgage for multiplied by the remaining years on your term.
For example, If you have a 4% rate on a $300,000 mortgage and you have 3 years left on your term but the current 3 year terms are being offered at just 3% then that is a 1% differential. 1% the mortgage is $3,000 per year for 3 years = $9,000 penalty! Some differential penalties are also tied to prime rates regardless of what your rate was so penalties could be even higher. Be careful!
The only way to accurately determine your buyout penalty is to call your mortgage company and ask them. You should do this prior to listing your house for sale.
Legal Closing Costs
Every Real Estate transaction will require a lawyer. Lawyer fees vary greatly as does the expertise of lawyers. We would always recommend you employ a lawyer who specializes in Real Estate transactions. Most Realtors have a list of good lawyers they recommend and will provide estimates of typical cost for each.
Additional legal costs could include:
- notarization costs to waive Dower Rights
- obtain Estopple certificates if selling a condo
- other services not associated with a typical transaction
- Costs incurred to remove any title registrations such as liens are the responsibility of the seller. The cost of transferring the title is typically picked up by the buyer.
Other Real Estate Closing Costs
- GST tax is an often over looked cost in Real Estate transactions. It is important to remember that most goods and services are taxed and that includes the Realtor’s commissions.
- Real Property Reports (RPR's) are survey documents that show the location of structures on your land in relation to property lines and will be required for most sales. They have no expiry date but must show the current state of improvements on the land. If you have added a deck or fence for example, chances are you will need to purchase a new one or get the existing one updated. Lack of an RPR showing proof of compliance with the municipality could potentially complicate things, result in hold backs or even collapse the deal.
RPR's are very important and will need to be ordered early in the process because they take time to produce and if they identify some non-compliance issue it usually involves applying for relaxation or building permits with the municipality which takes even more time and cost.
- Municipal Compliance of your Real Property Report is required to show your property is not breaking any development bylaws or is encroaching on any setbacks or property lines. The municipalities charge a fee for that service.
- Development or relaxation permits as required if your RPR indicates the property does not meet municipal compliance.
- Tax Adjustments Depending on what day the home changes ownership and how you pay your taxes, there could be some adjustments made for things like taxes, home association fees and the like. For example, in Calgary, people who pay property taxes yearly do so the end of June for the whole calendar year (6 months in arrears and 6 months in advance). If the new owner takes possession in mid April, the sellers will have to reimburse the buyers for the tax from January 1 through possession day.
- Revenue Canada Clearance Certificate from an accountant may be required if you are intending to leave the country or if you are considered a "non-resident" for income tax purposes.
- Condominium Specific Costs can be substantial. If you are selling a condo, refer to our condominium page for more specific information.
There are several ways you can reduce these costs. Start by using a quality Realtor that charges low commission fees, this alone can save you thousands of dollars. Lawyers fees also vary from firm to firm, choose one with reasonable rates. Save all your documents when you buy a house, and save any condominium documents you receive, they’ll save you money when you sell. If your mortgage is up for renewal and you suspect you may be selling soon, consider an open mortgage to avoid buyout penalties when you sell. If you have a traditional mortgage (as opposed to a Line of Credit mortgage) and you are purchasing another property, you may be able to port your mortgage and avoid the mortgage buyout penalties.Back to Top