Selling is buying in reverse — with its own costs
This is the other end of ownership, and it comes with the same gap between the sticker number and the real number that catches first-time buyers. A seller sees the sale price and starts spending it mentally — but before any of it reaches your bank account, a series of costs comes out: the real estate commission, legal fees, the payoff of your remaining mortgage (plus a penalty if you break the term early), and adjustments for things you’ve prepaid. All told, seller closing costs typically run 4% to 7% of the sale price, the great majority of it commission.[8]
There’s also a tax dimension most people don’t think about until it’s too late — the principal residence exemption and the legal duty to report the sale. This guide walks the process, lays out the full cost stack, explains the tax, and weighs whether to sell on your own, so you can calculate your real net proceeds before you ever put up a sign. It’s the mirror image of buying; we’ll use British Columbia and Ontario as examples.
The sale price is not your money. Your net proceeds — after commission, payoff, penalty, and fees — are. Calculate those first.
The process, step by step
Selling mirrors buying in reverse, and runs through a predictable sequence. First, price it right: a comparative market analysis of recent comparable sales in your neighbourhood sets a fair market value — overpricing stalls a listing, while underpricing leaves money behind.[1] Second, choose your path — a full-service agent, a discount or flat-fee model, or selling it yourself. Third, sign the listing agreement, which sets out the listing price, the total commission, and the cooperating (buyer-agent) commission.[2] Fourth, prepare, stage, and market the home. Fifth, receive and negotiate offers — the mirror of making one, weighing price against conditions. And sixth, close, where a lawyer or notary handles the title transfer and the money. Each step has a cost attached, which is what the rest of this guide is about.
Commission: the biggest cost, and it’s negotiable
Real estate commission is the single largest fee most people will ever pay, so it deserves the most scrutiny. FCAC notes that commission is based on the sale price, may be negotiable, and typically ranges from 2% to 6% depending on location.[1] In practice a combined rate near 5% is a common Ontario benchmark — often around 2.5% to the buyer’s agent and the balance to yours — with tiered or graduated scales common in the West.[2] The seller generally pays both agents’ commission, deducted from the sale proceeds at closing (the funds go first to the lawyer, who pays out the agents).[2]
Two things sellers routinely miss. First, commission is fully negotiable — Canada’s Competition Act prohibits the fixing of real estate rates, so there is no legally mandated “standard,” and a single percentage point on a $700,000 home is $7,000.[3] Second, sales tax is added on top of the commission — 13% HST in Ontario, 5% GST in BC — and paid by you.[4] A recent Ontario change is worth knowing: under the Trust in Real Estate Services Act (in effect since December 2023), the seller decides whether to offer a cooperating commission to the buyer’s agent — though offering one remains standard practice, since buyer agents may steer clients away from a listing that offers none.[3] If your home doesn’t sell during the listing period, you typically owe no commission at all.[3]
The rest of the cost stack
Commission dominates, but several other costs come out of your proceeds. A real estate lawyer or notary (typically $800–$2,000) handles the title search, document preparation, mortgage discharge, title transfer, and your statement of adjustments.[5] You’ll pay a mortgage discharge fee (a few hundred dollars) to release the lender’s hold on title — and, critically, a prepayment penalty if you’re breaking your mortgage term early, which can be three months’ interest or the much larger Interest Rate Differential (see our guide to renewing and breaking a mortgage).[6] There are also adjustments, where you credit the buyer for items you prepaid past the closing date — property taxes, condo or strata fees, utilities — plus, for a condo, a status or estoppel certificate fee (roughly $100–$200) and any unpaid dues.[7] Finally, staging and pre-sale repairs aren’t closing costs but are real money — staging often runs $2,000–$5,000.[8]
| Seller cost | Typical range | Notes |
|---|---|---|
| Real estate commission | ~2–6% of sale price (+ HST/GST)[1] | The big one. Negotiable; seller usually pays both agents. |
| Legal / notary fees | ~$800–$2,000[5] | Title transfer, discharge, statement of adjustments |
| Mortgage discharge + penalty | A few hundred $ + any penalty[6] | Penalty if breaking the term: 3 months’ interest or the IRD |
| Adjustments | Varies[7] | Prepaid taxes, condo/strata fees, utilities to closing |
| Staging & repairs | ~$2,000–$5,000+[8] | Optional, but common to maximize price |
Closing day and your net proceeds
Here’s what actually happens at the end. A few days before closing, your lawyer or notary prepares a Statement of Adjustments — the final accounting that deducts all your costs (commission, mortgage payoff, legal fees, and adjustments) from the gross sale price.[5] On the completion date, ownership transfers to the buyer and your net proceeds are wired to your account, typically within one to three business days.[7]
The number that matters is the net, not the gross: your sale price, minus commission and its tax, minus your remaining mortgage balance and any prepayment penalty, minus legal fees and adjustments. On a $700,000 sale with a 5% commission, the commission alone (with HST) is roughly $40,000 — before any of the other costs. Run that full calculation before you list, so the figure on closing day is one you planned for rather than one that blindsides you.
The tax: the principal residence exemption (and reporting)
The reassuring part, restated from our guide to the costs of owning: when you sell your principal residence, you generally pay no capital gains tax on the increase in its value — provided it was your principal residence for every year you owned it.[9] For most people, the family home is the largest tax-free gain they’ll ever realize. But two things can bite, so it’s worth getting right.
⚠ You must report the sale — even when no tax is owed
Since 2016, you are required to report the sale and designate the property on your tax return (Schedule 3 and Form T2091(IND)) even when the gain is fully exempt; skip it and you can face penalties of $100 per month up to $8,000, and the CRA can deny the exemption.[9] And if you earned income from the home — by renting out part or all of it, including short-term rentals — you must report the sale and may owe tax on part of the gain.[1] Remember too the residential property flipping rule (a home owned for fewer than 365 days is generally taxed as business income, with life-event exceptions) and that capital improvements you kept receipts for add to your cost base and reduce a taxable gain.[9] This is genuine tax law and it’s individual — confirm your situation with the CRA and a tax professional before you file.
Should you sell it yourself?
Because commission is so large, many sellers consider going it alone — for-sale-by-owner (FSBO). Doing so avoids paying a commission, which is real money: tens of thousands of dollars on a typical home.[10] The trade-off is that you take on everything an agent would do: pricing the home (often with a paid appraisal), getting it onto the MLS (usually a flat-fee “mere posting,” roughly $500–$1,500), marketing, staging, hosting showings, negotiating, and legally disclosing any known defects.[10] Two catches temper the savings: most FSBO sellers still offer the buyer’s agent around 2.5% (or buyer agents simply won’t show the home), and the risks — mispricing, weak exposure, legal missteps — are why FSBO is generally recommended only for those with real estate experience.[10] Weigh the commission you’d save against the price and certainty a strong agent can deliver, and choose with the numbers in front of you.
Your home-selling checklist
Know your net before you list. The rest is execution.
Where to turn
- Financial Consumer Agency of Canada — canada.ca — selling a home: the process, what to expect from a realtor, commission, legal fees, the mortgage discharge, and pricing your home.
- Canada Revenue Agency — canada.ca — the principal residence exemption, reporting the sale (Schedule 3 and Form T2091(IND)), and the residential property flipping rule; a tax professional for your situation.
- Your provincial real estate regulator — Ontario’s under the Trust in Real Estate Services Act (TRESA), BC’s real estate regulator — for your rights, the listing agreement, and required disclosures.
- A real estate lawyer or notary — the title transfer, the mortgage discharge, and your statement of adjustments.
- A real estate agent and a comparative market analysis — pricing, marketing, and negotiation; compare commission and services across a few before you sign a listing agreement.
Selling a home well comes down to the same discipline as the rest of ownership: replace the gross number in your head with the net number on paper. Price it on evidence, negotiate the commission, budget every cost that comes out at closing, handle the tax reporting even when you owe nothing, and you’ll walk away from the deal with exactly what you expected — which, at the end of the largest transaction most people ever make, is the whole point.
Net Proceeds Calculator
The sale price isn’t your money — your net proceeds are. Total the costs, get your net, and run the tax check before you list.
Open the worksheet →Sources & further reading
- Financial Consumer Agency of Canada — selling a home: sellers pay legal fees (including a statement of adjustment) and a mortgage discharge fee, and a prepayment penalty may apply if you break your mortgage term; set the sale price by comparing similar current listings in your neighbourhood; if you use a realtor you pay a commission based on the sale price, which may be negotiable and typically ranges from 2% to 6% depending on location; selling on your own avoids paying a commission; if you generated income from the home (for example by renting part or all of it) you must report the sale and pay tax on the proceeds. canada.ca — selling a home
- Commission mechanics (Canada) — the seller generally pays the commission for both the buyer’s and seller’s agents, which is paid from the sale proceeds at closing (first to the lawyer, who then pays the agents); the commission is usually split between the two agents and varies by region (for example, roughly 3.5%–5% combined in Ontario, with tiered or graduated scales common in Western provinces); the listing agreement specifies the listing price, the gross commission, and the cooperating (buyer-agent) commission. wowa.ca — cost of selling a house
- Commission is negotiable / Competition Act and TRESA — Canada’s Competition Act prohibits the fixing of real estate rates, so there is no legally mandated “standard” commission and every brokerage sets its own price; a roughly 5% total is a common Ontario benchmark, but sellers can negotiate; under Ontario’s Trust in Real Estate Services Act (TRESA), in effect since December 2023, the seller decides whether to offer a cooperating commission to the buyer’s agent, and if the home does not sell during the listing period the seller typically owes no commission. Real estate commission & TRESA (Ontario)
- Sales tax on commission — real estate commission is subject to sales tax (13% HST in Ontario, 5% GST in BC), which is added to the commission amount and paid by the seller. wowa.ca — Ontario commission & HST
- Legal fees and the statement of adjustments — a real estate lawyer or notary handles the title search, document preparation, mortgage discharge, title transfer, and the statement of adjustments; fees for sellers typically range from about $800 to $2,000 (higher for more complex transactions), and the lawyer or notary prepares the final statement of adjustments shortly before closing. Closing costs for home sellers in Canada
- Mortgage discharge and prepayment penalty — selling requires discharging your existing mortgage, for which the lender may charge a discharge or administration fee of a few hundred dollars; if you break your mortgage term early you may face a significant prepayment penalty (three months’ interest or the larger Interest Rate Differential). BC home-seller closing costs (discharge & penalty)
- Adjustments, condo costs, and net proceeds — at closing the seller credits the buyer for prepaid items split to the closing date (property taxes, condo or strata fees, utilities), and a condo seller pays for the status or estoppel certificate (roughly $100–$200) and clears any unpaid dues; all seller costs are deducted from the gross sale price on the statement of adjustments, and the net proceeds are wired to the seller, typically within one to three business days of completion. Statement of adjustments & net proceeds
- Total seller closing costs and staging — sellers in Canada typically pay about 4% to 7% of the sale price in closing costs, dominated by the real estate commission; staging and pre-sale repairs are additional and not technically closing costs, with professional staging often costing roughly $2,000–$5,000. RE/MAX — closing costs in Canada
- Canada Revenue Agency — principal residence: when you sell your principal residence you generally pay no tax on the gain because of the principal residence exemption, provided it was your principal residence for every year you owned it; effective 2016, the CRA will only allow the exemption if you report the disposition and designate the property on Schedule 3 and Form T2091(IND), and renting part or all of the home can affect the exemption; under the residential property flipping rule, a gain on a home owned for fewer than 365 consecutive days is generally taxed as business income unless a life-event exception applies; capital improvements add to the property’s adjusted cost base while routine repairs do not. canada.ca — principal residence
- For-sale-by-owner (FSBO) — selling your home yourself avoids paying a real estate commission but requires you to handle pricing (often with a paid appraisal), an MLS “mere posting” (a flat fee of roughly $500–$1,500), marketing, staging, showings, negotiation, and the legal disclosure of any known hazards or defects; FSBO sellers commonly still offer the buyer’s agent around 2.5% so that buyer agents will show the home, and FSBO is generally recommended only for those with prior experience in real estate transactions. wowa.ca — selling FSBO
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