Ten Costs to Consider When buying a House.

There's a lot of things to consider when you are looking at 'moving on up' in the world, or even just 'moving across the street'. Here are 10 things. You may overlooked one or two.

Balloons help in every situation. 

1. Realtor Fees

Sure, you could do a private sale but Realtors are there for a reason. They make things easier for you. And when you consider that buying a house may be the largest expense you ever have, it is best to surround yourself with professionals that have been trained to help you. Don't just throw a dart at the yellow pages ad; ask around. Get referrals - ultimately a referral is a transfer of trust from one person to the other. Another positive is that Realtors are able to be the voice of reason as they are not emotionally invested in the deal. Listen to them.

Now, their service isn't free. Find out ahead of time what their commission is. There are a lot of qualified Realty agencies out there that also offer varying rates in their commission. Budget around 3-4% of your home's value if you are selling for under 500K. More if over. But as a buyer there are NO Realtor fees; they get paid by the other agent involved in selling the house/property. A quality Realtor working exclusively for the Buyer can save you thousands, even tens of thousands of dollars in the long run.

2. Fix all of the little things that need doing

unless you are selling to him ^. Then just walk away fast. 

True story; I was selling my first house; a recent windstorm tore 4 shingles off my roof. Wasn't a big deal; i bought some shingles and promised that I would be repairing the roof before the closing date to a potential buyer (the Realtor). Totally was going to do it. They submitted an offer and in there was a stipulation that I fix the roof or $1000 would be deducted from the sale price.

So after I got over my hurt feelings, did I fix that roof? Hell yeah.

BUT... the house I purchased, I believe the sellers who said they would have the yard free and clear by the closing date, in particular was a broken-down camper van at the side of the house. My Realtor did not suggest having such a subject included in our offer. Three weeks went by (with many calls to our Realtor) and the broken camper van was still there. Could I have saved $1000 by doing the same thing? Hell Yeah, even if i had to spend $100 on a tow truck, I'd still be ahead.

Go through your house before sale; find those spots that you think could cost you $1000 off the purchase price. Decide if it's worth your time to fix it.


3. Legal Fees

Plan on $1000-1500 for closing costs, which must be done by a public notary or lawyer. Shop around, much like your Realtor. You could save a couple hundred dollars in just making a few phone calls.

He's no Bob Loblaw. Maybe keep shopping around. 

4. Your Time

Not many people consider the time still involved in purchasing a house. Near everyone still recommends the 'see it to believe it' approach to real estate, as opposed to buying it off of something like Amazon. And to do that, you need to schedule your time appropriately. You will have to meet Realtors, lawyers, home inspectors, mortgage brokers. Perhaps drive by a few houses on your own before asking your Realtor to see the inside. If you are moving different cities, be prepared to be very busy. Often a shopping vacation is anything but. Your Realtor can also recommend places to unwind at night of your chosen city.


5. Knowing the Fine Print of Your Mortgage

Have your broker explain your mortgage contract. What are the mortgage penalties if you move? Although most mortgages ar ‘portable’ it is vital to be aware that due to continual changes in approval guidelines your current lender may or may not be willing to approve the current mortgage being relocated to another residence. They could have issues with the property you choose (ie; a self-managed strata, a Co-Op, remediated Grow-op, etc.). In addition they may no longer be able to approve your mortgage based on a change of reported income or credit status.


6. Home insurance

A wide variety of variables can trigger insurance premiums to rise on an older (even a less expensive) property depending upon location and various construction methods. CMHC will insist on mortgage insurance on any high value loans. Perhaps you might want to consider purchasing mortgage protection plan insurance. What about theft, fire, etc. Things to discuss with your partner or broker.

On the positive side, it was a hell of a party...

7. Property Transfer Tax on Purchase

Buyers pay the Property Transfer Tax. Budget to pay 2% on the first $100,000 of the purchase price, 1% on the rest. So if you buy a house for $300,000 - plan on paying $4000 in the property transfer tax. Click here for a PTT calculator.


8. Eight. Eight. I Forget what Eight Is For

Sorry. Force of Habit.

9. Increased transportation costs

So you bought a house in the sticks. You love the quiet and country living. You don't mind the extra twenty minute drive to your employment. But about the gas bill of your V8 Diesel Extended Cab? Don't neglect the cost of operating a motor vehicle over a longer commute or the extra trips back and forth for hockey practice or swimming lessons. Sometimes, the practicality of your chosen location can be found lacking within six months of moving in.


10. Movers

This might be one of the last things you think about, it might not even be considered until after you have the keys. Consider that beginning/end of month is the busiest times for professional movers. Perhaps get a closing date mid-month.

Even when you are leaning on friends and rewarding them with pizza and beer, there is still a cost to this. Time, money, calling in favours your muscles may not be able to cash can cost you additional time and money in the future. Be prepared.

Very funny, Bruce. I said "In the GARAGE!" 

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