Are there Hidden Costs when purchasing a home? What can/will you be on the hook for…
You will have closing costs that are paid to the notary or lawyer to complete the title transfer. Those costs can vary from $1000 to $1600 dollars.
Home Inspection. When I'm looking at properties and evaluating them, I'm not only using my past construction experience and knowledge, but buyers and I are scouting to see what other inspectors we might need to bring in, such as a plumber, electrician or a structural engineer besides the home inspector, to properly check the entire home. For a single family detached home it's almost always a necessity. For condos it’s a little different and you may not need your own inspection if you know what to look for in the unit and the strata docs. What about new construction? Yes!
Be prepared that you will need an insurance policy if you are getting a mortgage. Your lender will require you to show proof of your insurance policy before they advance the funds. So make sure you have funds to acquire a policy.
You may have to reimburse the seller for some prepaid utilities or the annual property taxes. You will see that come up on the statement of adjustments when the property is transferred to your name at the notary or your lawyer’s office. If the seller prepaid for 12 months of annual property tax and two months later they sell you the house, they are not going to give you 10 months worth of property tax in good faith; they will ask for that to be shown as a credit to them, at the time of completion.
Property Transfer Tax: everybody in British Columbia purchasing a property is required to pay PTT. On the first 200,000 you pay 1%, then 2% on anything above 200,000 and then 3% anything above 2 million dollars. This could be a substantial expense to you. This fee CANNOT be rolled into your mortgage so you must have the extra funds to pay for it.
GST must be paid on new construction. That will be a charge of 5% of the price.
Appraisal costs. The lender will want to confirm by ordering a 3rd party appraisal, that the property they will advance the funds for is in fact appraised at very close value as your purchase contract. Here's a negotiating tip for you. When you're talking to your mortgage broker or a lender, ask them if they think this property might need an appraisal. If they say yes, ask them who's going to be paying for it. Most likely they might say - it's paid by the clients. This is your opportunity to say, “we would really appreciate it if the lender covers that cost, as a small token of appreciation for our business. Plus my friend said their broker/lender did that for them last week.” Then stay SILENT. First one to speak, loses. Lol.
Ground Penetrating Radar (GPR) Scan. If you are looking at a property from the early 1900 to 1980s, are you aware that there's a chance there was an underground/above ground oil storage tank? What's the worst case scenario? Well, if you buy property and your REALTOR doesn't talk to you about it and you purchase the property only later to find out that a tank is buried in the ground, that is not something I would want to come across. The remediation costs could be in the tens of thousands of dollars to the homeowner and I'm strongly advising you to be very careful when you're buying those properties.
Hopefully this was helpful. Be sure you are working with an agent who is proactively thinking about all these things covering your behind…..so you're not behind in your payments!
We are here to help and to assist. Call us at the neuHouzz Real Estate Team: 778-476-8917