In most real estate transactions, the most significant fee you will pay when selling a home is the commission which is usually split between your agent and the buyers’ agent. But that does not necessarily mean that you would save money going without a REALTOR®. Selling your home without a REALTOR® could be more expensive in the long run, especially if it is your first time selling a home or property. In addition, you have to worry about liability, marketing, prolonged utility bills, and the possibility that you may end up selling your home at an unfair market rate.
Suppose you are looking to sell a home in Alberta, Canada. Below is how to keep costs down.
Quick take: Why is selling a home so expensive in Alberta?
- The home selling process requires the services of a REALTOR®, property evaluator, and attorney.
- Making the house presentable to buyers may require you to continue paying utility bills.
- You may sell the home “as is “or after making improvements.
- Selling your home on your own is expensive in the long run.
Why is selling a home so expensive in Alberta?
When selling a home in Alberta and other parts of Canada, the significant costs you will encounter are:
- Real estate commission – Split between your REALTOR® and the buyer’s REALTOR®.
- Legal fees.
- Appraisal fees (if you decide to get the home appraised). Get an estimate of value by using Sweetly’s Home Estimate.
- Inspection (often borne by the buyer).
- Maintenance fees such as lawn or snow.
- Sales tax on real estate commissions.
TIP: The great thing about working with Sweetly is that we offer many different programs depending on what works best for you. If you value time and convenience and would like to sell your home without showings, a Swift Sale is the easiest way to sell a home. If you’d like to test the open market at any asking price, we also offer a Listing with Confidence which allows you to change to another program at any time.
Why not sell the home FSBO (For Sale By Owner) to avoid the expenses above?
The work of a REALTOR® includes marketing the home or property, negotiation, title transfer, and liability protection. If you decide to sell your home on your own, you will have to take the role of a REALTOR®. The issue is. Any mistake made during the sale process may open you up to liability.
There is also the issue of fair market value.
How do you know if you are getting the best deal for your home or property?
REALTORS® in Alberta includes a home valuation as part of the sales process. A home valuation is a professional opinion on the value of the home. The opinion is based on appraisal methods that estimate the home’s current value, typically using recently sold homes nearby as a metric for establishing value. You can quickly view homes that have sold recently in your neighbourhood by looking at nearby sold data.
Selling a home without conducting a home appraisal may result in selling for less than the market would bear.
TIP: You can get an approximate value of your home by using Sweetly’s algorithmic home value estimate tool.
Current market trends
REALTORS® have access to a large pool of buyers and know what is trending in the housing industry. That is beneficial in that working with a REALTOR® can help you avoid making home improvements that do not add value to the home.
Remember, house market trends change almost yearly. Recently, we have gone through the tiny home trend, mobile home trend, open floor plans, and more trends are popping up. A REALTOR®’s job is to keep an eye on housing trends.
That information is vital to you because it tells you when to put your home on the market and what improvements you need to make.
What are the disadvantages of selling your home on your own?
A benefit of selling FSBO is you will avoid REALTOR® fees. But the disadvantages of selling FSBO outweigh the benefits. If you have REALTOR® experience and a network of buyers, selling your home may save you money. But, if it is your first time selling or if you are inexperienced, these are the mistakes you may make.
- Prolonged sale. Without access to a pool of potential buyers, finding a buyer for your home or property may take longer. In addition, if you haven’t paid off the mortgage for the property, that means ongoing payments even if you have moved to a new home. There is also the issue of property taxes, the money you will have to spend on marketing, and if you are not good at negotiations. As a result, you may sell the home at a loss.
- Legal liability. When selling a home in Alberta or anywhere else in Canada, you will have to complete and keep an eye on a lot of legal paperwork. If you make mistakes. You risk fraud, breach of contract, and negligence charges. Your municipalities bylaws and zoning laws may also be an issue. If the laws change during the sales process and you are unaware of the changes, you expose yourself to liability. REALTORS® collaborate with property lawyers and understand local laws; working with one when selling your home can help you avoid lawsuits over seller’s disclosures, title issues, defects, etc.
- Home improvement losses and scams. Home improvements may or may not improve the value of your home. Consequently, you need a targeted approach when making improvements. REALTORS® understand what buyers want—because of that, hiring one can help you avoid making unnecessary improvements to your home or property.
- Negotiation skills. If the buyer has a REALTOR® during negotiations, you are going up against an experienced negotiator. Consequently, if your negotiation skills are not on par with the REALTOR®’s, you may incur a loss. A REALTOR® is a trained professional. Because of that, the majority do not negotiate with emotions. That makes them less likely to make poor decisions or get offended over trivial issues. You have an attachment to your home. You have lived in it, and maybe the home gave you some of your best years. Parting with it can get emotional, and that may lead to mistakes.
- Major distractions. If your home is up for sale, a buyer may show up at any time. That means putting your life on hold every time someone wants to view the home. Another issue is there is no guarantee that every show will result in a sale and that all the buyers are legit. Collaborating with a REALTOR® allows you to continue living and working without major disruptions to your work or free time.
- Access to a large pool of buyers and experts. Selling a home requires legal advice, you may need the services of a valuator, and you need a buyer. A REALTOR®’s bottom line is based on how large their network is, which means experienced REALTORS® have professionals they collaborate with and legitimate buyers looking to invest. So, if you are looking to save time and money, consider collaborating with a REALTOR® during the sales process.
How much does it cost to sell a home in Canada?
When selling a home in Alberta, you will encounter the following expenses.
Legal fees
The intricacy of the transaction determines how much you will spend on legal fees. For example, you are likely to spend more if there are issues with your title, if someone, say your spouse disputes the transaction or if there are other legal issues.
We recommend settling all legal issues before listing your property.
During the sale, you will have to pay transfer fees, lawyer labour fees, and other legal services. On average, sellers pay between $400 to $800 in legal fees if no legal issues exist.
REALTORS® commission
If both buyer and seller have REALTORS®, a percentage of the gains will go into commissions for both REALTORS®. On average, REALTORS® in Alberta charge a commission of 7/3. This means that they will charge 7 percent on the first $100,000 and 3% on the balance. For an average purchase price of $400,000, you can expect a commission of $16,000 ($7,000 on the first 100k and 3% of $300,000 = $16,000)
If you are familiar with the sale process or have a ready buyer, you can avoid REALTOR® commissions by selling the home on your own, or find out other ways to save money when you close on a real estate deal.
Bank fees
Some lenders may charge prepayment penalties if you intend to pay off your mortgage with gains from the sale. You may also have to pay a mortgage discharge fee.
If the mortgage is “portable,” you may avoid these charges by transferring your current mortgage to your new property.
We recommend consulting with your lender to understand all costs if you are yet to pay off a mortgage for a property you intend to sell.
Utility fees
To keep the house presentable to buyers, you may have to pay electricity, heating, and water bills for the home during the period the home remains unoccupied. The longer the home sits vacant, the higher the utility bills you will have to pay. You also must pay utility bills for your new home or property, meaning utility costs can add up over time.
Home inspection
Selling your home without getting it inspected may result in a lawsuit. For instance, what if the foundation has issues? Or what if there is a termite infestation?
In Alberta, the price of a home inspection varies widely, depending on the size of the home and labour. As a result, you may have to pay anywhere from $100 to $1000 or more.
Staging your home can be expensive.
A fresh coat of paint, repairs/replacements, landscaping, and home staging -all cost money.
You have the option to sell the home “as-is,” but that may mean settling for an amount that is lower than the home’s fair market value.
Some improvements that may increase the home’s value include:
- Door replacements. You may replace the old doors in the home, including the garage, to make them more appealing. An alternative is to paint the doors.
- Add a deck or an addition to the home that you can afford.
- Minor kitchen remodel. A full remodel may result in a loss.
The idea is to make the home appealing.
What is the least expensive way to sell a home in Canada?
“For sale by owner” is the least expensive way to sell a home in Canada, but it can be the riskiest. You do not have to pay commissions and related expenses. However, while the fees may be smaller, you may run into some issues that could cause the total value of the home sale to be lower than what it could have been with a different selling method. Additional issues may cause the sale process to be more frustrating as well.
In other words, it is often faster and safer to sell your home with the help of an experienced REALTOR®.
Alternatively, if you are looking for the easiest way to sell your home you can use Sweetly’s Swift Sale.
