Property Talk: Beyond the sticker price

Extra fees to watch for when buying a home

By Marnie Bennett, Ottawa Citizen August 13, 2011

Savvy home buyers know full well that a new-home sticker price is not the end of the financial story; they know to expect additional fees. Yet, even if the extra costs are anticipated, buyers may not be able to list them in great detail.

Here's a list to help you be prepared. It is important to know that most builders absorb the majority of these fees; however, not all do. Having a sense of what they are, especially since they can make a big difference to your bottom line, is a good idea. Don't be shy: Ask the builder's representative which costs are included and which are not.

Sales tax: Buyers often confess to being confused by Ontario's Harmonized Sales Tax (HST), which began July 1, 2010. The HST, which totals 13 per cent of the purchase price, only applies to new homes. Most home builders include HST in the price of the home. Government rebates may be available to those who purchase a new home where the HST is not included in the price. (Eligibility will vary depending on home ownership or investment properties.)

Land transfer tax: This provincial tax is applied to both new and resale homes.
It is a complex structure and depends on the value of the land. To give an example, a $300,000 home will require a land transfer tax of $2,975. Some first-time homebuyers may be eligible for a rebate of up to $2,000, so be sure to ask your real estate agent.

Utility and meter connection: These costs can add up to roughly $600.

Tarion Corporation warranty fee: This mandatory fee protects home buyers from construction defects and failure to fulfil terms of the purchasing agreement. This is also normally covered by the builder.
Legal fees: Most lawyers charge between $1,000 and $1,500 for their services.

Mortgage processing fee: These fees can vary but should cost a buyer anywhere from $500 to $1,000. Try asking your mortgage institution if these fees can be waived.

Moving costs: These vary greatly, depending on the number of movers hired, possessions to be moved and distance to be travelled. The going rate for two movers and a truck is $100 an hour. Reviewing additional costs is not the most exhilarating part of new-home hunting but, I can assure you, the better prepared you are, the less stressed you'll be with your final decision.

Marnie Bennett is a leading broker in Ottawa with more than 30 years' experience in real estate who has led her Bennett Real Estate Professionals team to the top spot internationally for Keller Williams. Contact her at marniebennett@bennettpros. com for a free report on 6 Things You Must Know Before You Buy.