Purchasing a home can be a very exciting and stressful
time. Buyers, particularly first time buyers, need to be aware that there are a
host of costs associated with buying a home above and beyond than the actual
purchase price. It helps to know what those costs are in advance rather than
get an unexpected surprise when closing that can add to an already stressful
experience.
Agent’s Commission
Your real estate agent receives a commission when you
sell -- usually a percentage of the sale price -- as does the buyer’s agent. A
typical total commission expense may be between 5 and 10% of the selling price,
but rates are negotiable. Generally, this covers the commission for both the
buyers' and sellers’ realtor, and the cost for both is paid by
the seller.
Closing Costs
These costs generally refer to legal fees, property tax
and utility adjustment costs.
Legal Fees
The monies used to pay your lawyer for the legal
transactions associated with the purchase of your home. Such transactions
include: reviewing the terms of the offer, conducting a title search on the
property, preparing and signing a mortgage, registering a new title,
conveyance, obtaining relevant documentation and determining appropriate
adjustment costs.
There are many types of lawyers and it is prudent and in your best interest to hire
a real estate lawyer or notary who specializes in home conveyance to handle
your home/property purchase transaction.
Other Costs other than closing costs
can include but are not limited to the following:
Appraisal Fees
Often purchasers want to ensure they are paying a
reasonable market price for the home they are purchasing. You may want to
condition your offer subject to a satisfactory appraisal by certified
appraiser.
Service Charges Fees and installation
charges to hook up and maintain utilities such as electricity, gas, telephone and internet
services (which you would also be familiar if you previously rented).
Moving Costs
Though it may sound obvious, purchasers sometimes do not
consider moving expenses a cost of buying a home. Moving costs will depend and
vary based on the distance of the move, the amount of furniture and goods to be
transported and the time of year/month in which you are moving. Get several
movers in to give you an estimate before choosing one. Friends rarely help
friends move! Also take into consideration the time and effort it takes
to pack up your present home. Do you plan on hiring people to pack on your
behalf? If not, you need to factor your time into the equation.
Appliances
Be careful in your deal that you check to see whether the
appliances are included in the purchase agreement. If not, you will need to go
out and buy them.
Landscaping, Fencing, Decks, Etc.
If purchasing a newly constructed home, keep in mind that
there will likely be a need to landscape and fence the yard in the first year
or two. If purchasing an older property, maintenance is something to factor
into your equation.
Annual Maintenance
Homes, like other possessions, require care and
maintenance to maintain their value. You need to plan for future painting, and
replacement items like appliances and furnaces, depending on the
age of the home you are buying.
Nothing can be more stressful than buying a home and trying to move when you
are strapped for cash. Selling your home is also an expensive endeavour. You
also need to take into consideration that you are also spending a good deal of
your time in the process. The phrase "Time is money” certainly
applies! Remember, anything you pass off to someone else will cost you
money; anything you don’t will cost you time. Speak to a RE/MAX agent to go
over the entire home buying process and associated costs.