It is always a shame when you hear about someone having a huge financial surprise on the day of closing. On the day you are making the biggest purchase of your life, many forget to calculate all of the other expenses that are to be paid on closing. These expenses will not be rolled into your mortgage, so be sure to calculate them all on top of the money you had planned to put down as your down payment. Typically, you should set aside 2 to 3 percent of the purchase price to cover costs such as:
Home Inspection – A written report is prepared by a qualified inspector who assesses the property for any defects or poor maintenance. It helps let you know what repairs and maintenance are required, and if the property is structurally sound.
Appraisal –It is required to make sure the property is acceptable as a security for the mortgage, to determine what the property is worth based on sales of comparable properties, and if what you paid for is close to the appraised value of the property.
Legal Fees/ Disbursements – The lawyer will prepare mortgage documents for you to sign and register your name on the title as the owner of the property once the deal closes. Ask your lawyer for a quote on his/her fees to close the deal and mortgage, including disbursements (courier costs, registration fee, photocopying, etc.). You may shop around to see what other lawyers charge and choose whoever you are comfortable dealing with.
Title Insurance or Survey fees – ensures the property is acceptable as security for the mortgage. Survey fees can usually be avoided if you can get an acceptable copy of survey from the previous owner.
Land transfer Tax – for certain provinces; usually based on the percentage of the purchase value. In Toronto, be sure to calculate the municipal tax as well.
Prepaid expenses – can include utilities, water, sewage, property tax, and oil in tank prepaid by the seller beyond your closing date.
Property Tax Holdback – Holdback required by the lender if the lender is the one collecting and paying for the property tax in order for them to have sufficient funds available to pay the next installment due.
Fire Insurance – usually required by the lender to be in place (as confirmed by the lawyer) by the time you go and sign the mortgage papers with your lawyer; ensures the borrower has adequate coverage to pay off the mortgage for the property in the event of fire or other damages.
Mortgage Protection Insurance Premiums – optional; paid monthly and covers the mortgage amount in case of death, disability, loss of employment or critical illness depending on the policy you choose.
Mortgage Insurance Premium (CMHC) – typically incurred if your mortgage amount exceeds 80% of loan-to-value; paid to the insurer as a one-time fee that can usually be added to the mortgage amount.
Mortgage Processing Fee – In unique situations, this is a fee brokers/lenders charge to process applications and is disclosed before an applicant signs the mortgage commitment.
Other fees – GST (Goods and Services Tax) or HST (Harmonized Sales Tax) for new homes, utility connection charges etc.
You should always be sure to clarify with your real estate agent, lawyer and lender about all of the costs you can expect on the day of closing. That day is supposed to be one of your happiest days and unexpected surprises can be avoided by asking these simple questions. For more information on buying or selling homes, feel free to call me, Sean Kavanagh, today at 905-220-9198 and I will be happy to answer all of your real estate questions.
Sean was very professional in looking after our residential needs. He was always available, answering all our calls and emails promptly. He helped us put together a plan for finding the home that suited our needs the most. He negotiated and secured the house we had been looking for on a Sunday.
The next day I was leaving for Las Vegas for business. Sean looked after all the details for selling my home. Sean texted regularly while I was away helping to keep me updated as to the situation of the listing, as well as with the purchase of our new home. While I was away, Sean even helped prepare the house to be listed. We decided to wait and take offers on the weekend when I returned home. That Sunday Sean presented us with multiple offers and the house was sold over the listing price.
Sean was not only professional but also very personable to us and we have become friends from this experience.
Paul & Gin
Tue, 11th January, 2011 - Posted by (0) Comment-
Low interest rates will “create their own risks” for the economy as it pertains to household debt levels, says the Bank of Canada deputy governor.
With household debt reaching extraordinary high levels, the Bank of Canada urges people to show prudence in their personal finances. Bank of Canada governor Mark Carney also warns of the risks posed by overstretched Canadian households, who currently carry a debt-to-disposable income ratio of 148%.
“Some have asked if increasing interest rates poses such a threat to households, why raise them? Yet others have asked if household debt is such a concern, why not raise rates and discourage borrowing?”
Once interest rates begin to rise, and they will rise, Canadians should look to their finances to ensure that their current debt will be serviceable at the new rate levels.
Over the past decade, home-equity lines of credit and loans surged by as much as 170%, or almost twice as fast as mortgage debt.
We saw this in the U.S. as people used their homes as ATMs, built up insurmountable personal debt and when interest rates rose, they couldn’t manage their debt. The Finance Minister has sited this as a growing issue and may institute measures to curb household debt growth.
This trend has slowed of late, and recent reports show that Canadians are reining in their credit card debt ( the worst kind of debt), but with the loan demand remaining to expand at a faster pace than personal income, Canadians should be more mindful of the debt they are taking on in these times of low interest rates.
Check the gutters – for proper flow and rain runoff. Also, check the hardware to ensure they are secured properly to the house.
Inspect the attic – for water seepage, condensation or even critters that found a warm spot for the winter and decided not to leave.
Examine foundation walls – to see if you have cracks from the winter that could let water in.
Check the roof – to ensure flashing, chimney and vents are in good condition.
Examine the condition of wooden decks, balconies, fences, gates, etc.
Fertilize the lawn
Inspect and repair roofing shingles (if needed).
Check the brick facing that may need mortar repair.
Examine the condition of doors and windows.
Paint those areas you have been putting off.
Have air conditioner serviced (hopefully before it gets too hot!).
Check the condition of the central heating system, fireplace (including chimney) and hot water tank.
Examine and reapply weather stripping around doors and windows.
Inspect the attic to see if vents are clear and that you are free of critters.
Clean the gutters.
Fertilize the lawn with Fall Fertilizer.
Reorganize shed/garage – put summer tools at the back and make your shovels, ice scrapers and snow blowers more accessible.
If everything mentioned above is taken care of throughout the year, you can reserve the winter months for small inside jobs and conserving your energy for shovelling the snow!
The last time you sold or bought a house, what did you get from your Realtor to say ‘Thanks for your business’? A bottle of wine, a bouquet of flowers, a gift card? How would you like to earn enough Airmiles for a return flight to Montreal, Chicago or New York City!
Let me send you on a vacation with my 2011 Airmiles Giveaway Program.
BONUS Accommodations Giveaway!!!! Not only will I give you Airmiles for your flight, all full service listings will also be entered into a draw to win a one-week (7 nights) vacation stay at multiple resorts worldwide.
How this works:
2 Transactions – Buy and Sell = 2 Airmiles for every $1000
Selling Side = $300,000
Buying Side = $500,000
$800,000 x 2 Airmiles/$1000 = 1600 Airmiles
1600 Airmiles can earn you a round trip ticket to Montreal, Chicago and New York City. If you aren’t planning on flying anywhere soon, use those points to buy yourself a new iPod Nano, Bose speaker system or Blue Ray disk player. For more details on the Airmiles rewards, visit www.airmiles.ca.
a) 1 transaction (Buy OR Sell) earns you 1 Airmile for every $1000.
b) Only full commission listings and purchases qualify for 2 Aimiles/$1000.
c) Only full commission listings qualify for the Bonus Accommodations Giveaway.
1. Your property won’t sell because it’s overpriced. It is very difficult to accept that your house may not be worth as much as you think it is worth. A house is only worth as much as the last sale, of similar structure, in your neighbourhood OR what a buyer is willing to pay for a home. It is also a mistake to add every dollar that you have spent on your house and add it to the sale price. It is a difficult exercise, but sellers should always try to look at things from a buyer’s perspective and ask themselves, “Would I buy this house for this price?”
2. Your property won’t sell because your photos are “less than impressive”. The vast majority of home buyers now start their property search online, so your property had better look fantastic in photo. Today an internet view should be considered your first showing and if the photos impress, then you can hope for the second showing when they actually come to the home for a visit. People want to feel like they have been through a tour of the home when they view the photos online, so satisfy them by using as many photos as you can.
3. Your property won’t sell because it shows badly. This is a test for the senses. Do you have a dog, do you smoke in the house, do you cook with strong odour ingredients? Do you have mildew around the bathtub or shower, are the carpets stained, are the windows clean? Are all the dishes washed and put away, beds made, clothes off the floor? How is the lighting in the home? Is it too dark for evening showings? Do you still have every family photos and heirloom displayed prominently in the home? Is the grass cut or walk shovelled?
These are all things to consider when you look at how your home will show. When choosing your realtor, be sure to ask if free staging is part of their client services. This way you can be sure not to miss any of these important details.
4. Your property won’t sell because you’re invisible. With over 90% of buyers starting their real estate searches online, you have to expose your listing on as many real estate websites as you can. Long gone are the days of simply listing your home on the MLS and waiting by the phone. Be sure to hire a realtor that understands this and ask to see how he/she plans to expose your home to the market. With twitter, facebook, linkedIn, YouTube, company websites, blogs, kijiji, Craig’s List,… Today’s buyer comes from the internet, almost exclusively. The more places you expose your home to, the greater chance of it selling quickly for close to your asking price.
5. Your property won’t sell because it’s unavailable to show. The first 2-3 weeks is the most crucial for any new listing. If you plan on listing your home, you must be prepared to live at the mercy of the BUYER. If you don’t want to show your house because Mom is visiting from out of town, OR because you have temperamental pets, OR if you have children that need their uninterrupted scheduled naps, you should reconsider listing your home at a time when ‘anytime is a good time’ to show the home. One of the big mistakes sellers seem to make is when they turn down a showing with instructions to come back at a different time. “They can’t come at 2:00 because the game is on….tell them to come back at 6:00!” By 6:00, the buyers have decided 2 things: 1) you really aren’t interested in selling your home anyway and 2) they have decided to buy your neighbours home. If you are not prepared to open up your home at the convenience of the BUYER (not seller!) you should reconsider listing your home. As with an overpriced listing, a house that stays on the market too long will become stigmatized and prey for the bargain hunters……if you get any offers at all.
6. Your property won’t sell because of the time of year you listed your home. I do understand that many sellers cannot choose the time when they list their home, but for the people that can choose the time of year to list their property, please know that it is harder to sell a home with a pool in November than it would be to sell in March or April. Buyers will not only want to use the pool once they take possession, but if purchased in the winter, they will not be able to check all the mechanical workings of a closed pool. Also, bargain buyers will know getting rid of a home with a pool will be difficult in the late fall/winter months and use that to their advantage to get your list price down.
Also, if you are planning on selling a family home, do not list in the middle of the summer. Most families will want to be in their new home by the middle of the summer so the kids can get used to the new neighbourhood and can develop some friendships before the start of the school year. So, if we assume the average close on a property is 60 days and it takes on average 30 days to sell your home (depending on the market), you need to think about listing the home at least 60-90 days before the middle of summer.
7. Your property won’t sell because your listing is tired and stale on the market. Okay… yes, you overpriced your home initially when you first came on the market a year and a half ago. Now, finally you’re truly priced where you believe should be, but your listing has become tired and stale. Everyone who is looking for your type of property already saw your home when it first came to market. It is sometimes a good idea to remove the listing from the market and then re-list it to give it a fresh start.
This strategy only works, however, if all of the other 6 points listed here are taken care of. Remember, in a healthy market, your home should never become stale or tired if you have:
a) Priced it properly
b) Have attractive photos displaying the finer points of your home. AND the more photos the better!
c) It showing in tip top condition
d) Exposed your listing to the market in numerous and various methods marketing
e) Made your home easy and available for other agents to show your property
f) Considered the time of year you are listing your home.