Buying and selling a home is a big decision and a daunting process. Yet since owning a home impacts our lives drastically it is important for a real estate professional to give their clients an overview of all the important jargons that they will come across. In my real estate career I have come across a few most common questions asked which are listed below;
1. What are ‘closing costs’?
These are generally that most buyers are curious about as they want to build up a budget to transition into the new home and want to estimate the final payments to make before they move. The closing costs for a resale property include land transfer taxes, this is estimated on the basis of how much a property sells for. Also includes lawyers fee which in other words is cost for the lawyer to close the transaction of the property.
2. What are the closing costs involved with buying in pre-construction properties?
Pre-construction closing costs are a little different as compared to resale properties it generally includes lawyer’s fees, levies and occupancy fees, which is an interim occupancy that does not go towards the mortgage. When the building is registered, a mortgage will be required, until then, you may be paying rent. The interim occupancy is a percentage of the unpaid mortgage, estimated taxes and maintenance fees. Try our mortgage calculator
3. What are caps on levies?
Caps on levies apply to pre-construction properties. A new property will have to pay a levy for parks, education, meter hookups, sewers, water lines, roads and other infrastructure improvements. The cap in other words is the indicated maximum amount you will be charged.
4. Who pays the commission, Land Transfer Tax and when?
The commission is paid by the listing brokerage, (also known as the seller’s brokerage), from the successful closing of the property. The listing brokerage has agreed how much commission will be paid prior to listing the property and how much the listing agent’s broker will get, and how much the buying brokerage, or the cooperating brokerage, will receive. The HST is payable on top of the commission. The land transfer tax is paid by the buying party and varies according to how much the property is sold for.
5. What is a Status Certificate and why do I need it?
A status certificate is essentially a health report of the building, its reserves, any upcoming renovations, both minor and major (usually referred to as a special assessment), and any lawsuits that may affect maintenance fees. The reason it is important is to inform a prospective buyer of the fees involved so they can budget accordingly. Without the status certificate, they may not know that maintenance fees may jump up by any amount for any of the above listed reasons.
These are most common real estate jargons that clients ask real estate professionals if you have come across any other feel free to add them in the comments section.