Pedro Arrais
Province
When buying a new home, it is important to remember there are added expenses besides the mortgage. While most homeowners are prepared, a recent Ipsos Reid poll found three in 10 B.C. residents felt unprepared for the costs and expenditures of their first year in a new home.
Industry experts say first-time purchasers should have, in addition to their down payment, sufficient funds to cover closing costs that can add thousands of dollars to the purchase price. Buyers of homes over $500,000 should set aside 2.2 per cent for the property- transfer tax. They can also expect fees for such things as a home inspection, appraisal, and site survey.
“I had no clue at first,” says first-time home buyer Janna Lunam. “I knew nothing about the added costs until I was filled in by my realtor and friends and family.”
She had to use funds out of her down payment on her new $250,000, one-bedroom condo to pay for closing costs. “It was stressful,” says Lunam, 31. “A smaller down payment meant a bigger mortgage.”
Although her real estate agent supplied her with a checklist of expected costs, she still found the fees high. Lunam estimates her closing costs added up to about five per cent of her purchase price. “It seems like a lot.”
A home inspection, which can cost between $300 and $400, is a service that many buyers request, even for a new house.
“While many buyers automatically assume a new house is close to perfect, we always find a list of deficiencies that have to be addressed,” says Kerry Smith, owner of Inspectech, a home inspection business.
Smith routinely sees a range in quality of construction, with defects not readily apparent to the homeowner. “It actually takes more time to inspect a new home.”
While repairs to a new house and condominium would be covered by a new- home warranty, potential purchasers of anything over five years old should set aside $2,000 for maintenance for the first 24 months of ownership, Smith says.
Lawyer Derek Ashurst says while most of his clients have a good idea of the cost of his services, buyers are usually unprepared when they are presented with a bill to settle the property tax on a previously owned property.
“Most buyers don’t realize they have to reimburse the seller the portion of the property tax that has already been paid,” says Ashurst. “The amount can be as high as $2,000.”
He says while a lawyer’s bill, which ranges between $800 and $1,200, might seem high to some clients, it is an essential component of the process that serves to protect the legal rights of all parties involved.
