Ever wonder how much it would cost to sell your primary residence in the Greater Toronto Area? It can be confusing if you don't know where to start, however, all it takes is a simple formula and a few phone calls.
To start, have your realtor estimate your home's value.
The example simply serves as a point of reference. Professionals should still be consulted to aid you in the calculation. As you can see, the homeowners would have a net sales proceeds of approximately $267k.
When purchasing a home, just having enough for a downpayment may not be sufficient. There are several other expenses. Here are some potential additional closing costs (approximate, please do your own research!):
Lawyer fees $800 - $1,200
Typically includes disbursements (i.e registering a deed, title search, easement search, etc)
Home inspection $500
Not mandatory but often suggested. In multiple offer situations, buyers may choose to waive the home inspection condition.
Land transfer tax
This tax is based on the purchase price, there may be an additional Municipal Land Transfer Tax (applicable to Toronto). It is the buyer's responsibility to pay the Land Transfer Tax upon closing. First time home buyers may receive a credit to cover part of this expense.
Title insurance $250
Covers costs associated with encroachment issues, existing title liens, title fraud etc.
Insurance costs for high-ratio mortgages
Applies if the downpayment is less than 20%. The insurance premium may be added to the mortgage principal. However, the tax charged on the interest premium will be collected on closing.
Property survey $750 - $1,000
Surveys provide details about the lot size, lines and dimensions (typically useful for erecting fences, home additions, etc.)
Prepaid property tax and utility adjustments
The seller may have pre-paid property taxes or utilities. They may need to be reimbursed on closing.
HST (included in purchase price of most resale homes)
HST is typically charged on new homes.
These additional costs may amount to a surprising amount. Please be sure to ask a lot of questions prior to purchasing a property. People often have to scramble last minute to cover unexpected expenses!
If you’re considering diving into a residential real estate investment in Ontario, there are several terms you should become familiar with. It’s always best to seek professional advice before investing your savings. There are realtors that can guide you throughout this process. Be sure to hire the right agent with specific knowledge in real estate investments. Let’s start with some important definitions.
Leverage: using borrowed money to increase potential ROI (return on investment).
For example, if you make a 20% downpayment on a property, then 80% of your investment is leveraged.
ROI (Return on investment): tool used to evaluate the performance of an investment.
ROI=Net Operating Income (Gross Operating Income-Expenses) ÷ Initial Investment
OCR (Overall Cap Rate): the rate of return expressed as a percentage on a real estate investment property based on expected income.
Overall Cap Rate = Net Operating Income ÷ Value
Cash-On-Cash: the correlation between the cash earned and the cash invested in a given time period
Cash-On-Cash=Cash Flow Before Taxes ÷ Equity (Cash) Investment
These are only some of the commonly used investment terms. Before anything, it’s essential to get familiar with them. I would highly recommend purchasing and reading investment books prior to taking the plunge. Some people tend to convince themselves that their investment properties are performing better than they actually are. Don’t make the mistake of turning a blind eye! A prudent investor thoroughly analyzes the specifics of a given property. Good luck!
George El Masri
Royal LePage Meadowtowne Realty
Most people tend to believe their home is special. "It's got a great backyard", "special red bricks", and "it's never been smoked in". These are the kinds of things Canadian Realtors often hear when we walk into a listing appointment. Although the smoke-free environment might be a nice touch, it likely won't add $100,000 to the home's value. Here are some of the reasons you shouldn't overprice a property, I've also included a few other pointers!
Drawbacks Of Overpricing
More Time on Market
Overpriced listings tend to sit on the market for a longer period; buyers may hesitate to make an offer out of fear that something is wrong with the house
Helps The Competition
The higher price makes the competitor’s property look like a great deal
Lower Net Proceeds
Overpriced properties can eventually end up selling for less than market value. Additional time spent on the market also means more carrying costs
Realtors may avoid showing the property to their clients if they feel it’s overpriced
Benefits of Properly Pricing Your Home
You can save on mortgage payments, real estate taxes, insurance, and other carrying costs
It takes a lot of time and energy to keep the property clean and to prepare for showings. Proper pricing shortens market time
Exposure to More and Better Prospects
The right price will likely draw more serious buyers as opposed to bargain hunters and low ballers
Better Response From Advertising
Buyer inquiry calls are more readily converted into showing appointments when the price is not a deterrent
Preparation For The Sale
Most buyers are turned off by uncleanliness or odors in a home. Pay special attention to the odors produced by dogs, cats, or cigarettes.
Remove extra furniture, rugs, consoles, plants etc. to make your house appear larger and more spacious
Preparation For Showings
The marketing: professional photography, brochures, just listed post cards, online advertising etc, along with negotiation skills are not to be undermined. However, pricing is one of the most important factors with regards to the sale of your home. Next time you think of selling, be sure to get a full market analysis report. The importance of a knowledgeable Realtor is significant, choose the right agent, not the one who will charge you the least!
Things To Know Prior To Closing:
Don’t close on a Friday:
Time of Closing:
Make some calls before closing:
Double Closing – Buying and Selling On The Same Day
One word to describe this situation: “stressful”
On Completion Day
Inspect the property:
George El Masri
Royal LePage Meadowtowne Realty
People have asked about Power of Sale properties in Brampton, Mississauga, and the GTA. There seems to be a misconception that these are the best properties to shop for… if you’re looking for a deal. In some cases, you may profit from this type of sale, however, that is typically not the case...
What is a power of sale?
Overall, it’s a Canadian lender’s duty to sell a power of sale home for as much as possible. They certainly don’t want to risk getting sued by the homeowners (if they sell below market value). In addition, there is a headache involved with missing/dysfunctional appliances and potential physical damage to the property. Not to mention the right for the owners to redeem if they can pay back the defaulted amount. I’m personally not a fan of this type of purchase.
Remember to speak to a lawyer if you have any further questions.
Source: “BUYING A POWER OF SALE PROPERTY“, Bernie Jankowski, Barrister, Solicitor & Notary Public
There is a personal finance guru person out there who is quite popular and teaches people how to think “richer” so that they’ll become richer. [...] Shoving a wrinkled wad of bills into your pocket shows a lack of respect
for its power and value. She was taught to organize bills neatly, flattened, and by dollar value. The 20s would be together, then the 10s, and so on. All bills would face the same way. By doing this, she says that you’re respecting money, giving it a valued position, and that this one small organizational practice will help you to make more money.