# How Empty Nesters Can Save Money on Closing Costs When Selling Their Family Home
Empty nesters in Ottawa often face the challenge of selling their large family homes as they move into a new phase of life. Downsizing to a more manageable space not only simplifies their lifestyle, but also helps cut costs. However, selling a home involves closing costs that can add up quickly. Understanding and managing these costs can be crucial to maximizing the net gain from a home sale.
## Understanding Closing Costs
When selling a home, closing costs are the fees and expenses you pay at the end of a real estate transaction. For sellers, closing costs mainly include the realtor’s commission, legal fees, and mortgage payout charges. Let's break these down a little further:
1. Realtor Commission: This is the fee you pay to your real estate agent for selling your home. In Ottawa, it usually runs around 3% if your agent finds the buyer. If another agent brings the buyer, the fee can go up to 5%.
2. Real Estate Lawyer Fees: Hiring a lawyer is essential to ensure the sale proceeds smoothly. Legal fees for the sale of a home typically cost $900 plus taxes and disbursements.
3. Mortgage Payout Charges: If you pay off your mortgage early, there might be fees. This usually means at least three months of interest, but it may change based on your financial institution’s policy.
4. Adjustments: These are amounts shared between the buyer and seller, like prepaid property taxes or utility bills. If you’ve already paid for a month you won’t be in the house, this is adjusted at closing.
## The Agitation: Being Prepared Helps You Save
Selling a home can feel overwhelming, especially with the emotional ties to a family home. But being aware of the costs and understanding them means you can plan better.
1. Be Ready for Fees: Knowing you’ll face costs like realtor commissions and legal fees helps prepare your budget. Without this preparation, you might find the total sum surprising, eating into the profits you expect from selling.
2. Plan for Mortgage Costs: If your current mortgage isn’t up for renewal, paying it off early might mean extra charges. This is crucial for financial planning, especially if you intend to buy another property soon.
3. Understand Adjustments: These are often overlooked but can affect your final payout. Be prepared to adjust amounts for property taxes and other shared expenses at closing.
## The Solution: Strategies to Save Money
Here’s how you can save on closing costs when selling your family home:
### 1. Be Smart with Realtor Commissions
Choosing the right realtor is key. Negotiate the commission. While the standard is 3-5%, some realtors might offer flexibility, especially if you use them for your next home purchase.
### 2. Know Your Legal Needs
Lawyer fees might sound like a simple line item, but they can vary. Get quotes from a few different legal professionals to find a competitive rate. Ensure they cover all aspects of the sale and that there won’t be extras.
### 3. Check Mortgage Terms Early
Review your mortgage terms well before selling. If there are penalties for early repayment, they can be significant. Ask your lender if they offer any options to reduce penalties if you’re moving to another mortgage with them.
### 4. Plan for Adjustments
Have a clear record of any prepayments you’ve made on taxes or bills. This way, you can ensure adjustments at closing accurately reflect what you’ve prepaid.
### 5. Budget Wisely
Setting aside 1.5% to 4% of the home price can cover most unexpected costs. Overestimating allows you to handle surprises without stress.
---
## Why Now is the Right Time for Empty Nesters to Downsize
Ottawa is a vibrant city with diverse neighborhoods like Orleans, Beacon Hill, and Sandy Hill offering various living options. Whether moving closer to downtown or seeking a peaceful suburb, Ottawa has plenty to offer for those looking to downsize.
1. Strong Market Conditions: The Ottawa housing market has seen steady demand, making it a good time to sell. Inventory is moving quickly, so if you prepare well, you’re likely to see competitive offers.
2. Diverse Communities: With numerous neighborhoods to choose from, empty nesters can find communities that suit their new lifestyle—be it within the bustling Market area or the cozy edges of Cumberland.
3. Flexible Living Options: More options for condominiums and low-maintenance homes mean an opportunity to live comfortably but with less upkeep.
4. Access to Services: Ottawa offers excellent healthcare options, shopping centers, and recreational activities, all in close proximity, making it a great place to enjoy retirement or a new phase of life.
For empty nesters, selling a home may seem daunting with all the costs involved. However, understanding these expenses early and applying smart strategies can help maximize the benefits of selling their family home. Planning and preparation can turn the goal of downsizing into a smooth transition, helping them enjoy their new lifestyle without financial strain. If you're ready to explore your options, seek advice from a trusted real estate professional who specializes in helping empty nesters navigate this phase of life.