How to Sell a House in Canada?

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Selling a house can be one of the biggest financial decisions for a lot of people, and therefore, it is important to be well prepared to avoid any costly mistakes. Sellers often wonder what needs to be done before selling a house. Many sellers are met with unexpected costs, fees and taxes upon selling their house that affect their financial calculations. This can be a particularly overwhelming journey with a lot of questions and doubts along the way. Here is a step-by-step guide to selling a house that can help answer all your questions and guide you through the process of selling.

The first step of selling a house is to estimate the value of your house, calculate all the costs associated with selling your house and understand the tax implications that could apply. This would help you determine the net proceeds you would earn from the transaction.

1. Estimating the house value: A comparative market analysis (CMA) can help you estimate the value of your home. Typically completed by a real estate agent, this process involves comparing recently sold properties in your area that are similar to your property in terms of age, size and type. This comparison helps determine an approximate market value of your house. In case your house needs any repair work, you could also determine an after repair value (ARV) for your house. Our free home value estimator will help you get started.

2. Cost of selling a house: Closing costs when selling a house commonly include the cost of repairs, real estate agent commission, sales tax on the agent commission and lawyer fees. However, there can be other associated costs such as appraisal fee, cost of staging, cost of advertising or marketing, cleaning fees and cost of moving that should also be accounted for. Some of the costs may also be covered in the real estate agent fees. Apart from these, if you’re selling a house with a mortgage, you may be subjected to a mortgage prepayment penalty depending on the lending terms.

   Type of Cost	Approximate Amount
   Real estate agent commission	3% - 7% of the sale price (+HST)
   Cost of Repairs	Can range from a few hundreds to thousands depending on the scope
   Lawyer Fees	$700 - $1500
   Appraisal Fee	$300 - $500
   Staging Cost	$650 - $3,000+ (depending on existing furniture, size of the house and duration of staging)
   Marketing Cost	$1,200 - $3,000
   Moving Cost	$100 - $2,500+ (depending on number of rooms and inclusion of packing help)
   Cleaning Fee	$150-$650+ (depending on size and type of property)

3. Taxes for selling a house: Apart from the costs you may have to pay taxes on selling a house. You ought to pay capital gains tax on selling a house which is not your primary residence. The tax is levied on 50% of the gain value. This 50% of the gain value gets added to your income and you are taxed as per the tax bracket you fall under as per this total income.

   In April 2022, the federal budget announcement came with a proposal of an anti-flipping tax. If you’ve owned a primary residence for less than 12 months, you may lose the primary residence’s capital gains tax exemption. At the same time, if you sell an investment property in less than 12 months of buying it, you may be subjected to business income taxes instead of capital gains tax.

   Also, if you are not a resident of Canada for tax purposes as per the CRA guidelines, you would have to pay a special tax on the sale.

1. Sell through a real estate agent: The most conventional way is to sell through a real estate agent. Real estate agents typically charge the seller a commission which they split with the buyer’s agent. This commission ranges between 3-7% of the selling price of the house, with 5% being an industry average. To put in perspective, if your house is sold for $1,000,000, you would end up paying on an average $50,000 in commission. Typically, a real estate agent helps you determine the value of your home through a comparative market analysis (CMA), takes care of staging and listing your house on the MLS system, and finds potential buyers for your home. As you would be paying a significant commission to your agent, it is advisable to talk to multiple agents with relevant experience in your area to find the best suited agent for all your needs. Check out some real estate agents with verified transactions in your area.

2. For Sale by Owner (FSBO): Some homeowners may choose to skip hiring a real estate agent and selling a house privately to save some money or when they already have a buyer. In this case, the owner still has to pay the buyer’s agent’s commission and the cost of listing on the MLS system. When selling a house without a real estate agent, owners have to find the buyers on their own and therefore have to stage, advertise, market and show the property themselves. The sellers also need to set the price and vet the buyers themselves. It is also noteworthy that many buyers’ agents prefer to pass FSBO properties and therefore it may be difficult to find potential buyers. Therefore, selling the property yourself can be a tedious and time-consuming process that requires a great amount of research.

   Selling with a Real Estate Agent	For Sale by Owner (FSBO)
   The agent takes care of listing and marketing your house.	You have to get your property listed through a third party and manage the marketing yourself.
   The agent does a comparative market analysis to help determine a price you could get for your house.	You will have to do all the research by yourself.
   The agent will find potential buyers and arrange for showings.	You have to find potential buyers yourself and manage showings.
   The agent will manage the contract, help with the negotiations and help you pick the best offer.	You have to assess the offers yourself and negotiate with the buyers on your own.
   You will pay your listing agent and the buyer's agent.	You will be required to pay the buyer’s agent unless negotiated with the buyer.

3. iBuyers: iBuyers or instant buyers are companies that give you cash offers for your property without any conditions and buy your house as is. Even though this concept has gained popularity in the USA over the last couple of years, it is not very popular in Canada. Some companies that provide similar services are Properly, Sweetly and True North Buyer. Once you enter details of your property on the iBuyer’s website, they give you a cash offer within a day or two, which you may accept or reject. iBuyers may be ideal for those who want to sell quickly without going through the elaborate sale process.

Once you’ve decided how to sell, you need to be prepared with a rough timeline, the required documents, a sell-ready house and professional help.

1. Determine when to sell: Along with how to sell, you must also determine what is the right time to sell. Real estate markets are often seasonal in the larger cities and vary a bit throughout the year. Additionally, factors such as market conditions, competition in the neighbourhood and your personal goals can all be determinants of when to sell. Your agent might be able to advise you on the same.

2. Gather all the documents: Gather all the documents such as utility bills, property tax documents, appliance warranties and manuals, and any other documents that you have related to the house. Your real estate agent might also ask for a copy of the same.

3. Get your home inspected: It is ideal to get your home inspected by a professional to help uncover any potential issues that may require repair and prevent a sale from going through.

4. List out the necessary repairs and upgrades: Based on the inspection, you can decide whether you want to fix up an issue or not. Additionally, you may decide on upgrading some parts of your house to enhance its value. Either way, you must notify the buyers about the issues or the repairs and upgrades that have been made.

5. Find a good real estate lawyer: A real estate sale is a legal transaction that involves transfer of title from the seller to the buyer. It is important to have a good real estate lawyer who can ensure you are legally protected throughout the sale and are not cheated in any way.

   Even though the active role of the real estate lawyer comes into play when a legal contract is prepared and during the closing of the sale, it could be beneficial to get a lawyer on board early, especially if you decide to sell privately. This would ensure that you can get legal advice at any time during the sale process and that you are not scrambling to find a good lawyer at a later stage. It can be beneficial to talk to several lawyers before finalizing on one. Lawyer fees for selling a house are usually between $700 - $1,500.

Getting your house ready for sale can be a long process and it's best to start early. The longer you’ve stayed in a house, the more possessions you are likely to have gathered. You could start decluttering by giving away or selling what you don’t need. The less things you have, the easier your house would be to stage for a sale. There are some professional services that could also help you in this process.

At this time you could also undertake repairs and upgrades that could add value to your house. Buyers are always seeking for properties that are in a good condition. Simple improvements such as adding a fresh coat of paint can add new life to your house. You may also be able to get a home renovation loan to pay for these expenses.

Common repairs and upgrades that sellers choose to make are:

• Paint the house: This is the easiest way to make your house look better quickly and many sellers choose to paint the house before selling it. Our paint calculator can help you estimate how much time, money and paint would be required to paint your house.

• Renovating the kitchen: A minor kitchen renovation could simply include upgrading the appliances or countertops, adding an island or painting the cabinets. A full-fledged renovation on the other hand includes demolishing all the existing cabinets and islands and remodeling the entire kitchen with new finishes and fixtures. A complete remodel may also include changing the layout of the kitchen involving significant electrical and plumbing work. Average kitchen remodels can cost anywhere between $5,000 to $40,000 depending on the size and the scope of work.

• Renovating the bathrooms: Similar to renovating a kitchen, a bathroom renovation can also be a minor renovation or a complete remodel. Renovation may include replacing the vanity, replacing or repairing wall and floor tiles, replacing faucets and showerheads, replacing fixtures and fittings, installing new shower cubicles or partitions, plumbing work, electrical work and painting. A basic bathroom remodel can cost around $7,000 and luxury bathroom remodels can cost upwards of $55,000.

• Finishing the basement: If your basement is unfinished, finishing it can add value to your home. Depending on the size, a basement can be finished to add an additional living space or sometimes an entire guest suite to the home. Average basement remodeling cost can range from $35 per square foot to $55 per square foot.

• Adding closet systems: Adding proper closet systems that can enhance storage capacity can yield a good return on investment. A simple closet system installation can cost between $1,200 to $3,000.

• Backyard, garden and exterior upgrades: Outdoor space is one of the key reasons why people buy detached and semi-detached houses. Fixing up any broken fences, restaining the deck, adding a gazebo, barbeque or hot tub to the backyard, landscaping the garden and painting the exterior can all help sell the home faster.

• Replacing window coverings and weather strippings: Getting new window coverings and replacing worn out weather strippings on doors and windows can make the house look neater.

• Installing energy efficiency upgrades: With the number of eco-conscious buyers, improving the energy efficiency of the house can be helpful. Energy efficiency systems can help the buyers save money in the longer run and buyers may be willing to pay more for houses with such systems. Some of the common upgrades include energy saving lights, solar panels, installing high performance windows and improving insulation. You may be able to get a Greener Homes Grant for these upgrades.

• Updating light fixtures: Replacing outdated light fixtures to new ones can improve light quality and energy efficiency, both of which can interest potential buyers.

• Treat for termites and pests: Get a termite inspection and treat the house for termites or get pest control if required.

However, you must carefully assess what to fix and what not to fix when selling a house, as not all repairs and upgrades will add value to your house or help sell it quicker. You might end up losing money on unnecessary upgrades if you don’t evaluate their worth. Your agent may also be able to advise you regarding what repairs and upgrades could be helpful.

Cleaning and staging your house can add appeal to your house and attract potential buyers. A clean and maintained exterior and entryway could instantly make a great impression on the buyer. Clean walkways, well maintained gardens and fences, and clean, decluttered interiors always help set the right tone. It might be a good idea to deep clean the house and power wash the exterior.

At the same time, staging the rooms can help the buyer to imagine furniture configurations and understand the sizes of the rooms. Professional stagers ensure that your house looks impressive with complimenting furniture and accessories.

Creating an inviting atmosphere would always attract potential buyers. Staging can be expensive and you must assess the value addition it would bring before making the decision to stage. Some real agents might pay for some or all of the staging costs (out of their marketing costs) so it may be worthwhile to discuss the same with your agent.

At this stage, your house is ready to be sold so you must now fix a selling price and advertise the sale.

1. Pricing: Once your house is ready to sell, you must put a price tag on it. At this stage, you would likely know an approximate value of your home, however you need to arrive at a price you would list your house for. If you are selling FSBO, you could study the recent neighborhood sales to determine a price for your house. If you are selling through an agent, they would help you determine the price you put on the house. Additionally, a home appraiser may be able to give you an accurate price for your house. Depending on the market conditions, this price must factor in a negotiation window. In very competitive markets, buyers often get into bidding wars that may fetch you much over the asking price, however, there is no certainty to this.

2. Listing: Once you have determined a price for the house, you need to list the house for sale on platforms. Only licensed real estate professionals can list a house on realtor.ca, which is the national MLS platform and the quickest way to fetch buyers for your house. If you are selling privately (FSBO), you could get your house listed on realtor.ca through a third party website that would charge you a one time fee. You may also be able to pay a real estate agent a fixed fee to list your house on the platform.

   It is important for your listing to cover all important and accurate details about your house. Make sure to include clear and high quality images as they make the first impression on the buyers. You could use staged images taken by a professional photographer for listing, which could help buyers understand the layout of your house.

3. Advertising and Marketing: Real estate agents often use different online and print platforms to advertise their listings for maximum outreach. This could include social media such as Facebook or Instagram, e-mail, flyers, real estate magazines, putting up for sale signs and posting on websites. If you are selling your house privately, you could advertise your house yourself.

   Your agent may also organize an open house. Most open houses in Toronto receive a minimum of 8-10 attendees, with some houses having attracted more than 100 attendees in a day. Thus, this could be a great way to attract potential buyers.

   You or your agent could also organize virtual showings for your house.

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Once your house is on the market, potential buyers fix appointments to come see your house. Most buyers prefer evening or weekend showings. Keep the following in mind at this stage:

• Ensure your real estate agent has a key that they would share with the buyer’s agent for showings.
• Share the date and time availability for showings depending on your schedule. Doing this beforehand can help the agents to plan showings smoothly.
• Make sure you leave the house before every showing. It is not advisable to be around when the potential buyers come to see the house.
• Keep the house extremely clean during this time. Make sure the floors are vacuumed and mopped, the beds are made, there’s no foul smell, toilet lids are closed, dirty dishes are loaded into the dishwasher, and everything is neat and in order.
• Some people choose to move out for a few days during this time, especially when there are multiple showings scheduled everyday.
• Ensure you don’t leave any valuables out in the open.

How soon you get an offer on your house greatly depends on market conditions. Some sellers in very hot markets start getting offers within days of listing their property, while some sellers may have to wait for months before getting an offer. A seller may get multiple offers on their property sometimes, with the buyers being caught in a bidding war. There can be two kinds of offers:

Conditional Offer: A conditional offer has some conditions attached to it, upon fulfillment of which, the sale would be finalized. If the conditions are not met by the closing date, the offer is voided and the buyer’s deposit is returned. Both the buyer and seller can negotiate conditions on the offer. The most common conditions are a financing condition and an inspection condition.

Unconditional Offer: These kinds of offers are commonly seen when the markets are seller’s markets. Which means that there is more demand than supply and buyers are competing to buy the available properties. An unconditional offer means that the buyer and seller would close the deal at all costs. The seller who usually gets multiple offers in this situation can select the offer that is most beneficial to them.

After getting an offer from the buyer(s), you could choose to accept it, decline it or negotiate it. Your real estate agent can help you compare multiple offers to select the most suitable one.

Once both parties arrive at an agreement, the offer is signed by both and becomes a formal contract. The buyer pays a deposit as security in an act of good faith. This amount varies across Canada.

The entire process of closing usually takes 30-45 days between the signing of the agreement and the final date of closing. You could expect the following steps during this process:

1. Inspection: If the agreement includes a condition to inspect, the buyer would hire a professional to come and inspect the house. This could take 2-3 hours depending on the size of the house. The inspector would prepare a report listing all the issues they have uncovered. The buyer may request you to fix those issues. It is up to you to fix those issues, offer a credit to the buyer for the repairs or to reject the request at the risk of the sale being canceled.

2. Repairs as per the purchase agreement: If there were any repairs mentioned in the purchase agreement, this is the time you would undertake those.

3. Lender’s appraisal: If the buyer is taking a mortgage from a lender to buy your house, the lender may arrange for an appraisal to ensure that the value of the home is in line with the market standards.

4. Clear title: The buyer’s lawyer would conduct a title search to ensure that the property legally belongs to you and is yours to sell. If any problems arise such as pending claims, you would have to pay them off at the earliest to ensure that the sale goes through. Your lawyer may give solutions under such circumstances. If you got title insurance when you purchased the home, it would protect you against any debts of the previous owners or any claims against the title.

5. Clean and prepare to move: In most cases, you are expected to move out completely by the closing date. Thus you should start cleaning and moving your belongings out as the date nears. It is your moral responsibility to leave the house clean and in good condition for the buyers to move in.

6. Notify authorities: This is usually done by your lawyer and involves notifying utility companies and the city of the impending transfer of ownership.

7. Sign the documents and review the statement of adjustment: A day or two before the closing date, your lawyer would require you to sign all the paperwork for the transfer of ownership. You would also be able to review the statement of adjustment (also called settlement statement) that summarizes the financial details of the deal including all fees and credits paid and owed by the seller. This would have details of payments of property taxes, condo fees, parking permits and more and they will be adjusted in sale. For example if the sale is closed in March and you have paid property taxes up to July, the buyer would pay you the tax amount from March to July. You would also leave all the keys with your lawyer.

8. Closing Date: The closing date is when the deal is closed with the sale proceeds being transferred to you through your lawyer and the title being transferred to the buyer. This means that you have successfully sold your house and are no longer the owner of the said property. At this point, the sale is complete.

Selling a house can feel like a very daunting task requiring lots of patience. The above checklist for selling a house can help you cover all the bases and set you on the right path. Working with a knowledgeable team of real estate agents and lawyers can get you the best deal for your house and help minimize the risks. Market conditions vary from time to time and you could seek expert advice regarding them. You should always have realistic expectations and should not rush into making decisions.

The most common fees you could expect to pay when selling a house are:

• Real estate agent fees (and HST on the fees)
• Lawyer Fees
• Inspection Fees
• Appraisal Fees
• Cleaning Fees
• Staging Fees

Apart from these you should also account for cost of repair and moving costs and cost of advertising and marketing.

As a landlord, you have a right to sell a house with tenants. However, the tenants also have certain rights and thus it is important to follow procedure to prevent a wrongful eviction conviction. The tenancy rules vary across different provinces and applicable rules should be followed.

As per lease agreements in Ontario, you cannot end a fixed-term tenancy agreement and you must wait till the lease term is over or a buyer agrees to take over the agreement. If the lease has a termination due to a sale clause, you must give the tenants 30 days to move out after the house is sold. You may be able to negotiate with the tenants and offer them another place to move into or offer them one month’s rent. If the tenancy is month on month basis, you could offer the tenants 60 days notice to vacate the house. Alternatively, you could serve an eviction notice to the tenant stating the reason for eviction and they could choose to vacate or continue with the eviction process.

The tenants also have some rights during the sale process. They have a right to remain in the house during showings and should be notified 24 hours before a showing. The tenants also don’t need to prepare the house for showings. They cannot be evicted for renovations. The landlord must seek permission from the tenants before taking any pictures.

The seller pays the property tax up to the closing date for the particular year. The buyer pays the property tax for the rest of the year.

The only document that is a requisite for a sale is the ‘Agreement of Purchase and Sale’. However, when selling a house without an agent, you must make sure you have the following paperwork ready as they can be required at any time.

• The original ‘Residential Sale Contract’ from when you purchased the house.
• Property Tax receipts.
• Property Appraisal Report from a certified appraiser.
• Home Inspection Certificate.
• List of Chattels. Be sure to include manuals and warranty documents of chattels such as stoves, ovens and dishwashers.
• Utility payment receipts.
• Invoices of repairs or renovations.
• Termite Inspection Reports.
• HOA guidelines if your property is a part of a homeowners association.
• Some blank copies of offer and counteroffer forms.
• Residential Property Disclosure Form.
• ‘Rental Agreements’ if you have rented the property.
• Any forms that may be required by the buyer’s agent to ensure their commission will be paid.
• Keep your bank information handy.

Apart from these, your lawyer may provide you or direct you to arrange for some more documents depending on your unique situation.