Buyer's Guide
Why Cash Buyers Win in Montreal Real Estate (And What Financed Buyers Can Do About It)
Cash buyers have a genuine advantage in real estate transactions. It is worth being precise about what that …
Most sellers calculate their net proceeds like this: sale price, minus the mortgage balance, minus broker compensation. The number they get is almost always too optimistic.
Here is the complete list, in the order the costs arrive.
Before listing
The certificate of location. This is the most frequently forgotten item and one of the most expensive. The seller must provide an up-to-date certificate of location reflecting the current state of the land and buildings. If yours is more than about ten years old, or if work has been done since, the buyer or their notary will require a new one.
Budget roughly $800 to $1,500, more for a complex lot or a multi-unit building. Land surveyor turnaround can exceed several weeks in busy periods. Check yours at the start, not the night before signing.
Repairs and preparation. Paint, minor repairs, deep cleaning, temporary storage. It is not mandatory, but it is the budget line with the best return on the list.
Staging. If you use a home staging service, packages range from a few hundred dollars for a consultation to several thousand for a full staging with rented furniture.
At the sale
Broker compensation. Generally 4% to 5% of the sale price, plus GST and QST. This is not a regulated rate in Quebec, it is negotiable. On $500,000, that is roughly $20,000 to $25,000 before tax.
It is the most visible item, and often the only one sellers anticipate.
At the notary
In Quebec the buyer chooses and pays the notary for the deed of sale. But the seller has notarial costs of their own.
The mortgage discharge. If you have a mortgage, it must be struck from the land register. That discharge is at the seller’s expense, generally a few hundred dollars.
Adjustments. You have probably prepaid your municipal and school taxes for the current year, possibly heating oil or condo fees as well. The notary calculates the portion attributable to the buyer from the possession date and that amount comes back to you. It is an adjustment in your favour, not a cost, but it changes your final tally.
Your lender
The prepayment penalty. This is the line that hurts most when it arrives without warning.
If you sell before the end of your mortgage term and do not port your loan to a new property, your lender applies a penalty. On a variable rate it is generally three months of interest. On a fixed rate it is the greater of three months of interest and the interest rate differential, a calculation that can produce figures in the thousands.
Call your lender before you list and ask for the exact penalty amount as of your expected date. Ask as well whether your loan is portable to a new property, which can eliminate it entirely.
Taxes
Capital gains. If the property sold was your principal residence for every year you owned it, the gain is generally exempt. You must still report the disposition on your tax return.
If it was not your principal residence, for example a cottage, an income property or a rental, a portion of the gain becomes taxable. The calculation depends on your situation and on the rules in force the year of the sale. Talk to an accountant before the sale, not after, because some decisions can only be made beforehand.
The plex case. If you are selling a duplex or triplex where you occupied one unit, the rental portion can generate a taxable gain and sometimes recapture of capital cost allowance if you claimed it. This is exactly the situation where an hour with an accountant costs less than the surprise.
The move
Often left out of the calculation: movers, temporary storage if there is a gap between dates, service connections, final cleaning, and sometimes transitional rent between the two properties.
An example at $500,000
As an indication, for a single-family home sold at $500,000 with a mortgage in place:
- Broker compensation: roughly $22,500 before tax
- Certificate of location: roughly $1,200
- Preparation and staging: $1,000 to $3,000
- Mortgage discharge: a few hundred dollars
- Mortgage penalty: from zero to several thousand, depending on your term
- Moving: $1,500 to $3,000
Costs other than compensation easily reach $5,000 to $10,000. That is the portion missing from most sellers’ mental math.
What to do before listing
Three calls, in this order:
- Your lender, for the penalty and loan portability.
- Your land surveyor or notary, to validate the certificate of location.
- Your accountant, if the property has not always been your principal residence.
Those three calls take an hour in total and prevent nearly every bad surprise.
Next, read selling with or without a broker and how to prepare your home for sale.
Want a realistic net proceeds statement for your property before deciding? Write to me. I will build it with you, line by line.
Georges Matar
Residential Real Estate Broker · RE/MAX DU CARTIER INC.
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