Hidden Real Estate Costs that 90% of home buyers and sellers do not know about.
Do you believe that the price attached to a property listing is the ultimate cost? You are not alone, many sellers and buyers hold the same belief.
Every time a property is handed over from one owner to another, it attracts quite a number of costs and fees. Some will run into thousands of dollars. The final price, whether you are selling your old home or buying a new one, will be inclusive of all these costs.
Speaking to reputable real estate lawyers around BC, we came up with a number of home buying and selling costs you never knew about.
Costs for buyers
- Title insurance: it is not mandatory you get insurance for your property. However, you will need it to beat the widespread real estate fraud and identity theft. For a home valued at $450,000, a few hundreds of dollars will be adequate.
- Legal expenses: you will need a real estate lawyer to help you process the required documents. You will be expected to part with 1% of the buying price or a maximum flat figure of $1,200, and GST plus disbursement cost.
- Transfer tax: in BC there is a property transfer tax. The rate is 1% on the first $100,000 and 2% on the balance of the purchase price. You will see this in the statement of adjustments from your lawyer or notary. The progressive levy is a fraction of the total purchase price.
- Mortgage cost: a good number of banks do not charge any fee on their mortgage offers. You had better confirm with your bank. However, if you will be getting at least 80% of the home price from mortgage, you will have to obtain insurance with Canada Mortgage and Housing Corporation.
- Adjustment costs: apart from property taxes, the rest of the expenses in this list are utility bills.
Costs for seller
- Legal fees: just like the buyer, the seller will need legal counsel to ensure everything is done within the provisions of the property law. Legal fees are approximately $1,200 exclusive of GST depending on the complexity of the purchase or sale. Usually, the lawyers charge less for a sellers transaction.
- Real estate agent commission: while many sellers know that they pay a realtors commission. Both realtors will split a commission that is calculated by the total sale price.
- Mortgage discharge: selling your home before your mortgage matures is a big financial risk. It will attract penalties and a discharge fee. On average, you can pay up to 3 months of your mortgage installments in penalties. The discharge fee lies between $200 and $300. However, you can get a waiver of these penalties and discharge fee if you transfer your old mortgage to the home you just bought.
Did you know about these costs? If you know anyone thinking of buying or selling please share this information
Please feel welcome to contact me with any questions