Budgeting for Property “Closing Costs”

Are you considering buying, selling, or refinancing a property in British Columbia? Get informed to avoid unexpected financial surprises associated with legal title changes and document registrations (“closing costs”). Here are the common closing costs you should expect to pay when you sell or buy property:

Selling a Property

• Realtor Commissions: are a percentage of the house value. (Usually 7% on $100K and 2 ½ % on the balance of the sale price)
  Tip: negotiate commission price before hiring a realtor and ask what their commission includes. For example, does the realtor cover the cost of staging your home, having professional photos taken, cleaning the property or hiring movers? Some realtors charge a higher commission to pay for (and arrange) these things on your behalf.  
• GST: 5% tax applied on top of the realtor commission.
• Legal Fees: In BC, you can hire a Notary Public or a lawyer to do your legal conveyancing (handle the money and paperwork). Costs vary by office and depend upon the associated payouts (ie: mortgage, outstanding or deferred property taxes, property liens). Estimated range: $1,300 – $2,000.
  Tip: If you are getting quotes from multiple legal offices, always ask for the total cost, including taxes, disbursements & conveyancing software, so that you can compare “apples to apples”. 
• Mortgage: If you have a mortgage or secured line of credit, it will be paid from the sale proceeds, along with any prepayment penalty and interest.
• Deferred Property Taxes: If you deferred property taxes, your BC Notary or lawyer will pay this bill out of your sale proceeds to the Minister of Finance.  
• Other Pro-Rated Adjustments: (a) if you sell before the annual taxes are due, you’ll owe a prorated amount upon completion; (b) if your water/sewer utilities are metered, your BC Notary will ensure your utilities are paid as at your Adjustment Date; (c) if you live in a strata corporation, the strata may require a holdback in the amount of last month’s strata fees and may also request a move out fee, per the strata bylaws. 

Buying a Property

• Legal Fees (BC Notary or lawyer): Costs range, depending on if you get a mortgage / HELOC or pay “cash”.
  Tip: When asking for quotes, inquire about the total costs, including taxes and disbursements. Estimated range: $1,900 – $2,600.
• BC Provincial Property Transfer Tax (PTT): Based on the property’s market value, with rates structured as follows:
  • 1% on the first $200,000;
  • 2% on amounts up to $2 million;
  • 3% for values up to $3 million;
  • 5% on values above $3 million.
• Title Insurance: This protects homeowners and lenders against potential fraud or issues with the property title. If you pay “cash” this is an optional coverage, but if you get a mortgage this if often a “required” coverage and a condition of your mortgage lender. The cost of a title insurance policy is typically around $200, but can be higher for properties or mortgages exceeding $1 million (ie: $700-1,000).
• Other (Smaller) Adjustments: (a) strata fees (first month) and move-in fee, if you purchased in a strata corporation; (b) prorated property taxes for your share of the year (if you purchase after the July tax due date); (c) insurance binder (if you have a mortgage), which typically costs $50-100, depending on your insurance agent.

This article outlines common adjustments and estimated closing costs in BC. For specific inquiries or assistance with your real estate transaction, reach out to your local BC Notary.