One thing that a lot of buyers don’t always think about are the closing costs that arise on completion of a real estate transaction. When a buyer purchases a home, the buyer pays the purchase price of the home as agreed to in the Agreement of Purchase and Sale. However, this price does not include the closing costs.
Some typical closing costs for buyers that are over and above the purchase price may include such items as:
- Adjustments for property taxes and gas heating
- Legal expenses and disbursements
- Title search and land registry fees
- Title insurance fees
- Mortgage expenses
- Survey costs
- Condominium status certificates
- Zoning memoranda
- Tax certificates
- House insurance
- HST
- Land transfer taxes
- Moving costs
- Household goods
Although a seller may also have additional costs at closing, the seller has the benefit of the proceeds of the sale from which to pay them. Buyers may find themselves in a much more difficult financial situation as they are bound by agreement to complete the transaction.
The dollar amount of the closing costs can vary significantly depending on the type of property being purchased. There could be substantial costs for items such as mortgage discharge penalties, complicated surveys right through to legal fees and disbursements to obtain clear title to the property. When submitting an offer for a property, buyers should always budget accordingly as unexpected complexities can and do occur. It is difficult to estimate exact closing costs as circumstances surrounding each property transaction vary. Buyers may want to consider setting aside at least 2-3% of the purchase price and then consult with the appropriate professionals as a starting point.