Avoid a $13K Mistake When Buying a Home! | Toronto Real Estate Broker Karen Law
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Avoid a $13K Mistake When Buying a Home! | Toronto Real Estate Broker Karen Law

Hey guys, it’s your Toronto real estate agent
here, Karen law. One of the deals I closed earlier this week has a learning lesson from
it. So I represented the sellers in this deal and everything worked out smoothly on our
end. The issue was with the purchasers, the buyers. I get a phone call on (the) closing
date at about 3:30 p.m. And that phone call is from my client’s lawyer. The seller’s lawyer
calls me at 3:30 p.m on closing date to inform me that the buyers are $13,000 short of closing.
That’s right. They need to find $13,000 in order to get the keys to the property. And
because they were short of these funds at the last minute, they weren’t going to be
able to close that day. So what this told me was that the buyers did not do their due
diligence in calculating all of the costs that would be involved in closing a real estate
transaction. So guys, before you start your home search, before you start browsing properties,
please sit down and understand all the closing costs that are involved in purchasing a home.
Here in the Toronto area, let’s say you purchase a $500,000 property, the closing costs are
largely the Land Transfer Taxes. And the Land Transfer Taxes are dependent on the purchase
price. They’re also payable before you get the keys to your new home. So for example
on that $500,000 property, there’s about $13,000 worth of land transfer taxes and that $13,000
is payable before you get the keys to your new home. The other closing costs that are
involved are your legal fees for your lawyer. Also buffer room for any adjustments that
the lawyer might bill you for. Adjustments can be like property taxes, utility costs.
You’ll also want to budget in any moving expenses and you always want to have some extra (funds)
’cause in case there’s anything that needs to be fixed in the home that you’re moving
into. So these are things to always buffer for so that you’re not short of funds like
this purchaser was. And on top of that guys, there were penalties involved for this purchaser
because they couldn’t close on the original closing date. They had to spend the weekend
gathering the $13,000 from friends and relatives. And as a result, they paid over $1,500 worth
of penalties. These penalties were the result of legal fees for having the delayed closing.
Also, my clients who were the sellers, they already moved into their new house and now
they had to pay a bridge loan financing as a result of this error on the buyer’s part.
So who had to pay for the bridge loan financing? The buyers did. So not only were they about
$13,000 short on their end, they incurred penalties of I think just under $2,000 and this was only for an extra, I think it was 4 days, an extra four days of delayed closing. So guys just to avoid the headache, avoid paying thousands of dollars of penalties or
fees, or falling short money before you get keys to your new property, do the math and
know all the costs that are involved in purchasing a property. Their real estate agent, unfortunately,
fell short on advising their clients appropriately as well. There were mortgage brokers, lenders
that were involved in the process as well. I’m not sure why the lenders overlooked the
$13,000 that they were short on. Also. I’m very surprised that it took the lawyers until
the exact day of closing to figure out the shortage of funds. There were a lot of professionals
that were involved along the way on that side of the transaction. So if you guys need any
assistance in understanding the breakdown of costs in order to purchase a property,
give me a call. Myself, our team, we’re here to advise you correctly and to guide you so
that there are no issues when you purchase a home.

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