Sellers in Ontario often calculate their expected net proceeds by subtracting their mortgage balance from the expected sale price. The actual net is lower — sometimes significantly — because of the costs associated with selling. Understanding these costs before you list allows you to plan your move accurately and avoid surprises at closing.
Real estate commission
Commission is the largest cost of selling a home in Ontario. It is paid by the seller at closing and is typically split between the listing brokerage and the buyer's brokerage. Commission in Ontario is negotiable — there is no fixed rate set by law or by real estate boards.
When comparing commission rates from different agents, factor in the full service offering: marketing reach, professional photography, pricing expertise, and negotiation skill all affect your final sale price. A lower commission rate that results in a lower sale price is not a saving.
HST on commission
Real estate commission in Ontario is subject to HST (13%). This is separate from the commission itself. If your commission is $X, you will also pay 13% of $X in HST. This is often overlooked in seller net calculations.
Legal fees (your real estate lawyer)
You need a real estate lawyer to handle the closing on your sale — regardless of whether you are also buying. Seller legal fees in Ontario typically range from $800 to $1,500 depending on complexity. Your lawyer handles the mortgage discharge, title transfer, and all closing documentation.
Mortgage discharge and prepayment penalties
If you are breaking your mortgage early (before the end of your current term), your lender will charge a prepayment penalty. This can range from three months of interest (for variable-rate mortgages) to a larger interest rate differential (IRD) penalty for fixed-rate mortgages — sometimes $10,000 to $20,000 or more depending on the difference between your rate and current rates.
If you are renewing your mortgage with a new purchase, you may be able to port your mortgage to the new property and avoid or reduce the penalty. Speak with your mortgage professional before your listing appointment — this is one of the most important numbers to know in advance.
Property tax adjustments
Property taxes are adjusted at closing based on the possession date. If you have pre-paid taxes for the year, the buyer owes you the portion covering the period after they take possession. If taxes are in arrears, you pay the outstanding amount. Your lawyer handles this calculation at closing.
Pre-listing costs
These are costs you incur before closing: repairs, professional cleaning, staging, photography. These vary widely but for most Kitchener Waterloo sellers should be budgeted at $1,000 to $5,000 depending on the property and the work needed.
What to budget for in total
As a rough guide for sellers in Kitchener, Waterloo, and Cambridge: budget 3 to 5 percent of your sale price to cover all selling costs combined. The exact figure depends heavily on your commission arrangement and whether you face a mortgage prepayment penalty.
Your mortgage prepayment penalty is the closing cost that most often surprises sellers — and it is the one most worth knowing in advance. Call your lender before your listing appointment and ask for your penalty quote in writing.
Costs sellers do not pay
In Ontario, sellers do not pay land transfer tax (that is paid by the buyer). Sellers also do not pay for the buyer's home inspection or the buyer's legal fees. Your costs are limited to those listed above, plus any negotiated credits you agree to provide as part of an accepted offer.