A cash offer and a listed sale should be compared on both money and terms. Start with a realistic selling price for each route, subtract the costs you would actually pay, and then review the conditions. A lower direct offer does not automatically leave you with more money.
Compare net proceeds using the same mortgage payout and clearly stated assumptions. Then assess closing risk and convenience separately.
Use the same starting point
Ask for an as-is valuation as well as any estimate based on completing renovations. Comparing a direct offer for an unrenovated property against a renovated listing price without subtracting the work produces a misleading result.
Use a written commission proposal if you plan to list. Include applicable tax on services, legal work and any mortgage charges. The FCAC selling guide describes common categories of selling costs. The amounts depend on your agreements and circumstances.
An example where listing leaves more
The following amounts are invented to demonstrate the calculation. They are not estimates of Toronto prices, standard fees or an offer from Trusted Home Group. The commission line uses a hypothetical combined 4% commission plus 13% HST.
| Item | Listed sale | Direct sale |
|---|---|---|
| Sale price | $800,000 | $720,000 |
| Commission including HST | −$36,160 | $0 assumed |
| Preparation and repairs | −$15,000 | $0 assumed |
| Additional holding expenses | −$8,000 | −$2,000 |
| Legal and other closing costs | −$2,000 | −$2,000 |
| Mortgage payout and charges | −$450,000 | −$450,000 |
| Illustrative net | $288,840 | $266,000 |
Here the listed route produces $22,840 more. A seller might still value a direct transaction’s particular terms, but should understand the price of that choice. Substitute actual quotes and include any tax liability applicable to your situation.
Check that costs are not counted twice
A lender’s payout statement can include amounts you have already put elsewhere in your comparison. Check the breakdown before subtracting them again. Mortgage principal payments reduce what you owe; distinguish them from interest and other holding expenses.
If a buyer says they pay closing costs, ask exactly which costs and whether there is a cap. Confirm how the agreement handles legal fees, mortgage penalties, liens and adjustments. “No commission” is not the same as “no costs of any kind.”
Read the offer beyond the price
- Who is the legal purchaser?
- What deposit is required, when and to whom?
- What inspection, financing or other conditions remain?
- Can the agreement be assigned?
- What happens if closing is delayed?
- What contents and property condition are promised?
A buyer calling an offer “cash” does not answer those questions. Have your lawyer review the written terms and ask the buyer for evidence supporting its ability to complete the transaction.
Choose with your priorities visible
Write your three most important outcomes beside the calculation: net proceeds, a particular move date, avoiding repairs, fewer visits or another practical need. Then ask which proposal best serves those priorities.
If you already have a listing agreement, include any obligations it creates even if the eventual buyer approaches you directly. The best comparison uses your actual circumstances rather than a promise that one route always wins.
Common questions
Does a cash buyer always save me money?
No. Lower transaction expenses can be outweighed by a lower selling price. Compare written offers and realistic net proceeds.
Is commission fixed at a standard rate?
Use the commission terms actually proposed or agreed with your brokerage. Do not assume the example percentage applies to your transaction.
Prepared by Trusted Home Group for Ontario homeowners. This is general information, not advice on a particular transaction. Editorial approach and corrections.
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