Lawyer Fees for Selling a House: Everything You Need to Know
When it comes to selling your home, it’s important to keep in mind that you may not receive the sale price you were hoping for. In fact, there are a number of potential closing costs that can eat away at your bottom line. This can be a tough pill to swallow, especially if you were attached to the assessed value of your property.
For example, when the author of this article sold their condo, they were disappointed to find that they didn’t receive the municipality listed price. However, they learned an important lesson: liquid net worth is a measure of true net worth. In other words, your home is only worth what someone is willing to pay for it. With this in mind, it’s important to be objective and realistic when setting your expectations for the sale price of your home.
What Are Closing Costs When Selling?
Closing costs are additional expenses that both the buyer and seller of real estate incur, on top of the selling price of the property. As a seller, you can expect to pay an average of 1-3% of the property’s sale price towards closing costs, according to Opendoor.com.
In British Columbia, the average home sale price is between $675,000 to $700,000, and the average closing costs range from $14,000 to $28,000, with an average of $21,000. These costs include legal fees, real estate commissions, title insurance, and other expenses related to the sale of the property.
As a seller in BC, you will also be responsible for paying the property transfer tax (PTT), which is a tax levied on the transfer of property ownership. It’s important to note that you will be required to pay closing costs both when buying and selling a property.
Here are some of the closing costs you may encounter when selling a home in BC:
- Legal fees
- Real estate commissions
- Title insurance
- Home inspection fees
- Mortgage discharge fees
- Property tax adjustments
- Strata fees and special levies
- Utility bills and other outstanding charges
It’s important to factor in these costs when determining your net proceeds from the sale of your property.
Notary or Lawyer Fees for Selling a House in BC
When selling a house in British Columbia, legal fees are one of the main closing costs. These fees are charged by notaries, lawyers, or legal professionals to prepare your home sale disbursement package. The cost of these fees can vary between $800 to $2000, depending on the professional you choose.
Using a notary public is a more economical choice compared to a lawyer. In BC, there is a $20 Society of Notaries Public TAF (Trust Administration Fee) charge, and GST and PST, which is 12%, are added on top of this fee. The prices for disbursement package preparation are relatively similar among recommended notaries. The disbursement package includes prorated strata fees, prorated property taxes for the year, and a review of the mortgage discharge by the notary or lawyer. They also review the land title search and prepare it in the disbursement package.
In Vancouver, there is an additional $20 charge from your lawyer or notary public to deal with the Empty Homes Tax declaration. This is to ensure that the property has been lived in for over 185 days of the calendar year. This declaration causes a lot of additional paperwork for your lawyer or notary, and hence they have to charge you extra for it.
Overall, the cost of notary or lawyer fees for selling a house in BC can be significant, but it is worth it for the peace of mind that comes with a smooth and legal sale.
Realtor Commission Fees
When buying a home in British Columbia, the seller pays for the buying realtor commission fees. As the seller, you pay both the buying and selling realtor’s commission fees, which are agreed upon in the Contract of Purchase and Sale. The commission paid 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 remaining balance, while the selling agent receives 3.875% on the first $100,000 and 1.375% on the remaining balance. For example, if you accepted an offer price of $1,000,000 for your home, the buyer’s agent would receive $3125 ($100,0003.125%) and $10,462 ($900,0001.1625%). The seller’s real estate agent would receive $3875 ($100,0003.875%) and $12,375 ($900,0001.375%).
Adding these together, the total commission fees for both the buyer’s and seller’s agents would be $29,837.50. You would then add 5% GST, which equals $31,329.38. This is the total amount you would have to pay as the seller for both the buyer’s and seller’s agent commission fees.
It’s important to note that there are other options to reduce real estate commissions, such as One Percent Realty. However, it’s important to keep in mind that the buyer’s agent usually asks for full commission, so you may only be able to save on the seller’s agent fee.
Strata Document Fees or Strata Fees
If you live in a home that has a strata, you will likely have to pay fees associated with the strata documents. These documents are typically included in the realtor commission and cost around $100-$150. The realtor will request the documents from your strata.
In addition to the strata document fees, there are other costs associated with strata living. The seller is responsible for paying the strata fee for the month, if they haven’t already been charged. This fee is typically organized by your notary public or real estate lawyer.
It is important to carefully read the fine print in the strata documents to avoid being charged twice. Make sure to double check the Seller Statement of Adjustments to ensure that you are not being charged for a fee that you have already paid. For example, you may have already paid the strata fee for the month or the move out fee.
If you have moved out prior to listing your home, make sure that you do not pay twice. You may need to go over your bank statements to show that you have already paid for certain fees.
Remember to review the strata documents carefully and ask questions if you have any doubts.
Mortgage Discharge Fee
If you have a closed mortgage and you are not porting it, you will be required to pay a fee to cancel it. However, if you have an open mortgage and pay the penalty of a higher interest rate, you will not have to pay the mortgage discharge fee when you sell your home. Choosing an open mortgage with a higher interest rate may be beneficial if you plan on selling your home in the near future.
When selling your home, it is important to consider all of the closing costs and subtract them from your selling price to determine your net proceeds. The mortgage discharge fee, along with other fees such as strata documents, real estate commissions, and notary or lawyer fees, will be subtracted from your selling price. This calculation will give you your net proceeds from the sale of your home.
Here is a visual representation of the 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
In addition to the commission fee paid to the real estate agent, there are other costs that can eat away at your net proceeds when selling a home. These costs are incurred before you receive the actual money from the sale.
- Staging costs: Staging is the process of preparing a home for sale by making it look more attractive to potential buyers. This includes renting furniture and decor to make the home look more appealing. Staging costs can vary depending on the size of the home and the extent of the staging. On average, it can cost around $3000 to stage a 1 bedroom condo.
- Painting: A fresh coat of paint can brighten up a home and make it look more appealing to potential buyers. The cost of painting can vary depending on the size of the home and the extent of the painting required. On average, it can cost around $700 to get a fresh coat of paint.
- Upgrades to fix: During the home inspection, the buyer may request repairs to be made if the repair costs are over a certain amount. The cost of these repairs can vary depending on the extent of the repairs required.
- Upgrades and renovations: If you choose to make upgrades or renovations to your home for the purpose of selling it, these costs should also be included. This can include getting new window coverings or making other improvements to the home.
It is important to consider these costs when selling your home to ensure that you are prepared for all of the expenses associated with the sale.
Cutting Into the Bottom Line
When you sell a house in British Columbia, there are several closing costs that can cut into your bottom line. These costs include fees for a notary or a lawyer, a realtor, and additional expenses such as staging, painting, and getting new window coverings. All in all, these costs can amount to over 2% of the agreed selling price.
While there isn’t a specific calculator for the cost of selling a house in BC, you can roughly calculate your return on investment (ROI) on your primary residence. It’s important to keep the bottom line in mind when preparing to get mortgage quotes online, for example.
If you’re looking for a more hands-off real estate investing route, investing with addy can allow you to collect distributions and capital gains without having to manage the property yourself.
In addition to selling costs, it’s important to consider other factors when buying or selling a home. Properly offers a Buy First and Sell Later program for those looking to purchase a new home before selling their current one. Single female home buyers can also benefit from tips for purchasing their first condo, while a First Home Savings Account can help you save for your first home.
Were you surprised at the closing costs when you sold your home? Did you use a notary or a lawyer for your closing? Keep these costs in mind and explore your options for real estate investing and savings accounts to make the most of your home-buying and selling experience.
Frequently Asked Questions
1. What are the typical legal fees associated with selling a house in Ontario?
When selling a house in Ontario, the legal fees can vary depending on the complexity of the transaction and the lawyer you choose to work with. Generally, legal fees can range from $500 to $3000. It is important to discuss the fees upfront with your lawyer to avoid any surprises.
2. How much does it cost to transfer title with a lawyer?
The cost of transferring title with a lawyer can also vary depending on the lawyer and the complexity of the transaction. Typically, the cost can range from $300 to $1000. It is important to discuss this cost with your lawyer to avoid any confusion.
3. Who is responsible for paying closing costs when selling a house?
In Ontario, the seller is responsible for paying the closing costs when selling a house. These costs can include legal fees, real estate commissions, and other miscellaneous fees.
4. What is the average cost of a real estate lawyer in Canada?
The average cost of a real estate lawyer in Canada can vary depending on the province and the lawyer you choose to work with. Generally, legal fees can range from $500 to $3000. It is important to discuss the fees upfront with your lawyer to avoid any surprises.
5. Do I need a lawyer to sell a house in British Columbia?
While it is not required by law to have a lawyer when selling a house in British Columbia, it is highly recommended. A lawyer can help ensure that all legal requirements are met and can provide valuable advice throughout the transaction.
6. What are the legal fees for selling a house in Manitoba?
The legal fees for selling a house in Manitoba can vary depending on the lawyer and the complexity of the transaction. Generally, legal fees can range from $500 to $3000. It is important to discuss the fees upfront with your lawyer to avoid any surprises.
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