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What Closing Costs Are Sellers Responsible For?


What Closing Costs Are Sellers Responsible For?

Kevin Yu

My parents are from Hong Kong. With very little money but many hopes and dreams, they decided to leave their home...

My parents are from Hong Kong. With very little money but many hopes and dreams, they decided to leave their home...

Feb 4 5 minutes read

When it comes to closing costs, buyers are usually the ones with a long laundry list of fees to have to pay. From home inspections, to title insurance, to appraisals, and everything in between, there are plenty of closing costs that buyers need to be aware of and budget for.

But sellers have closing costs to pay, too. While there may be a profit involved in the sale of a home, these closing costs need to be factored into the calculations in order to arrive at the true take-home amount.

Generally speaking, sellers can expect to pay anywhere between 2% to 7% of the sale price of their home.

Here are the closing costs that you may need to budget for when you sell.

Agent Commissions 

Real estate agents have a lot to do in order to help their clients successfully sell their homes. Obviously, they need to be compensated for their services, and as such, they're paid via commissions.

Typically, commissions are based on the sale price of the home in question. The commission is then split between the buyer and listing agents. The way in which the commission is split is usually based on what the listing agreement stipulates, but it's often 50/50.

In Toronto, commissions are generally about 5% of the sale price of a home. That 5% is then split accordingly between both listing and buyers agents. Sellers are typically responsible for paying for real estate agent commissions, both for the listing and buyer agents. So, if you sell your home for $700,000, for instance, you would have to pay $35,000 (plus tax) to your listing brokerage.

Mortgage Payoff Costs

You may have to pay a prepayment penalty for repaying your mortgage early before the end of the term when you sell. If your mortgage is being discharged or transferred, there may be a cost associated with that, too. The costs associated with these fees will vary from one mortgage contract to another, so it's important that you check yours to see what types of charges you can expect to pay.


A land survey can be an important document in the real estate process. If the property in question is sitting on land that you don't actually own - such as may be the case with an easement or right-of-way - the buyer might be in for an unpleasant surprise at some point down the road. That's why some buyers request to see a survey of the property before they sign on the dotted line.

If you don't have a survey, you might be on the hook for obtaining one - and paying for it - which could run you anywhere between $700 to over $1,000.


If you've paid for property taxes, utilities, water, and home insurance past the closing date, the buyer would be responsible for paying what you're owed, which is calculated by the lawyer. These costs are adjusted and apportioned accordingly. But if any one of these items has not been paid up to the closing date, you'll be on the hook to cover the difference.

Legal Fees

Lawyers play an important role in real estate transactions, and both buyers and sellers are responsible for seeking their own legal representation. The fees may vary depending on the complexity of the transaction, but you can expect to pay roughly $2,000 to $4,000 in lawyer fees.

Capital Gains Taxes

In most situations, sellers don't have to worry about paying capital gains taxes. If the property was your principal residence for each year that you owned it, you do not have to pay capital gains taxes. But if it wasn't your principal home at any time during the period that you owned it, you might be subject to capital gains taxes.

So, if the property you're selling is an investment property that you either rented out, fixed and flipped, or otherwise held for any other income-generating reason, you could be left paying these taxes at tax time after you sell.

A capital gain simply refers to any profits made on the sale of a property, minus any expenses. This is a simplified explanation, as there are plenty of details that go into calculating the exact gains realized. But these gains are subject to taxation under certain circumstances, so you'll want to speak with your tax specialist to make sure capital gains aren't another fee you have to worry about when you sell.

Ready to Sell?

While there may be many closing costs that you can't avoid, selling at a high price can help alleviate the financial burden of these costs. At the Kevin Yu Team, we'll work our magic to ensure that your home sells for top dollar to help offset any of the closing costs you're responsible for. Call and book your consultation today!

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