What You Need to Know About Closing Costs for Home Sellers in Halifax

Selling a home is always an exciting venture, but it comes with expenses that can catch you off guard. Picture this: you're at the closing table, bracing for a neat profit, only to find out that thousands of dollars are being deducted for closing costs. This can be a common scenario if you don't prepare for these expenses.

We're going to break down these costs for you, covering why they exist and how you can keep more of your money when selling your home in Halifax and the greater HRM area.

What Are Closing Costs?

Closing costs are the various fees and expenses you pay to finalize the sale of your home. They cover everything from transfer taxes to legal fees. Typically, sellers in Halifax can expect to pay between 6% to 10% of the home’s sale price in closing costs.

Knowing these costs ahead of time can help you budget accordingly and avoid any nasty last-minute surprises.

The Most Common Closing Costs for Home Sellers

1. Transfer Taxes and Recording Fees

Transfer taxes are provincial and local fees for legally transferring ownership of your home. In Nova Scotia, the Deed Transfer Tax (DTT) is generally 1.5% of the home’s purchase price, though it can vary depending on the municipality.

• Who pays these taxes? In Halifax, it’s typically the seller who covers the cost, but agreements can sometimes shift this responsibility to the buyer.

2. Title Insurance (Owner’s Policy)

Title insurance protects buyers from ownership disputes or legal claims on the property. While buyers usually purchase their own policy, many sellers opt to cover the owner’s title policy to sweeten the deal.

• Is title insurance mandatory? Not everywhere, but it’s often expected in Nova Scotia real estate transactions.
• Cost: Usually ranges from 0.5% to 1% of the sale price. For a $500,000 home in Halifax, this could mean $2,500 to $5,000.

3. Escrow and Closing Fees

Escrow services manage funds and documents to ensure the transaction goes smoothly. These fees also cover the paperwork required to finalize the transfer of ownership.

• What do escrow companies do?
• Hold funds in a secure account.
• Ensure all contract terms are met before money exchanges hands.
• How much do these fees cost? Usually between $500 and $2,000, depending on location and provider. In Halifax, expect to be on the lower end of this range.

4. Prorated Property Taxes

Property taxes in Halifax are paid annually, so you'll need to pay your share up until the closing date.

• How is it calculated? The total property tax bill is split based on the number of days you owned the home in the year.
• Example: If property taxes are $4,800 annually and you sell halfway through the year, you owe $2,400 in prorated taxes.

5. Homeowners Association (HOA) Fees

If your property falls under an HOA jurisdiction, expect additional costs at closing.

• Unpaid dues: Ensure any outstanding HOA fees are settled before closing.
• Transfer fees: Some HOAs charge a fee to process ownership changes, which can be between $200 and $1,000.

6. Attorney Fees (If Required)

In Nova Scotia, it’s common to hire a real estate attorney to review and finalize the sale transaction.

• Cost: Typically ranges from $500 to $1,500.
• What do they do?
• Review contracts and closing documents.
• Ensure the sale is legally sound.

How to Reduce Your Closing Costs

Closing costs can take a sizable chunk out of your home sale profits, but the good news is that there are ways to cut back on these expenses. Whether through negotiation, strategic choices, or finding cost-effective service providers, you have options to keep more money in your pocket. Here are some practical ways to lower your closing costs as a seller.

Sell Without an Agent (FSBO) — this means no listing agent commission. However, you’ll still need to:

• Pay the buyer’s agent commission (usually 2.5% to 3%).
• Handle marketing, negotiations, and paperwork yourself.

FSBO works best if you have experience in real estate or a buyer already lined up.

Ask the Buyer to Cover Some Costs

• In some deals, buyers agree to cover certain closing costs instead of negotiating a lower sale price.
• This works best in a seller’s market, where buyers compete for homes.

Shop Around for Service Providers

• Get multiple quotes for title insurance, escrow services, and attorneys.
• Some companies offer discounts for bundled services.

Preparing for Closing

As you approach the finish line of your home sale, there are still a few final steps to take before closing day. Proper preparation can help avoid last-minute surprises and ensure everything goes smoothly. Here’s what you need to do before handing over the keys.

1. Review the Closing Disclosure Early

• You’ll get a Closing Disclosure a few days before closing that lists all costs.
• Review it carefully to catch any unexpected charges.

2. Finalize Repairs and Paperwork

• Complete any agreed-upon repairs before closing.

Make sure liens, HOA fees, and taxes are paid to avoid delays.

Final Thoughts

Selling your home in Halifax isn’t just about finding a buyer. Closing costs can add up, but with the right knowledge and preparation, you can maximize your profit. Stay informed and plan ahead to keep more of your hard-earned money.