[...] net1506 wrote an interesting post today onHere’s a quick excerptSince I’m in home buying mode, I will share with you some expenses involved with purchasing a home. A lot of young readers here don’t own homes yet, so this may help with the planning. Legal:. In Newfoundland, purchasing a home with a … [...]

[...] Broke Ass Student (love the name) has hosted the 108th Carnival of Personal Finance. Another week of great articles, one of which was my article on Home Buying Costs. [...]

[...] ¤ Million Dollar Journey presents a helpful article for the first time home buyer on Home Buying Costs [...]

However, an agent can be useful:
1) in order to market your home (listing on MLS, open houses, etc),
2) deal with the paperwork, followup, etc (e.g., if it’s a conditional sale then the agent can deal with the home inspectors/ appraisers so you don’t have to leave work to open the house to the inspection)
3) buying a house in a city you are unfamiliar with (the agent can drive you around showing you neighborhoods, houses, etc). Also, since they have realtime access to MLS they get notice of listed properties before the public (i.e., there is a lag before it appears on http://www.mls.ca)
4) determining an accurate and current market value price of a property. Agents have easy access to MLS so they can see the history of a house, recent sale prices in an area, etc.

disclaimer; I am neither a lawyer nor realtor. I have moved numerous times across various provinces.

FT: Yes, I have represented myself. Legislation varies so it’s best to get advice from a lawyer in your area.

[...] More importantly, there are a myriad of hidden costs to purchasing a new home or condo which the developer tends to gloss over during the sales period which are not found in pre-existing home.  Suddenly, your affordable new home or condo comes with a lot of financial strings attached. This post dove-tails with Million Dollar Journey’s post about the costs of buying any home; I would suggest that you read his post first since I am going to avoid over-lap as much as possible. [...]

A buyer may purchase a home without a buyers agent. In that case the ignorant buyer may end up paying the sellers’ agent both commissions (via a more expensive house). However, a knowledgeable buyer can submit an offer where the seller still nets the same amount but the house price is lowered by buyer’s commission amount.

e.g.,
listed price = $100k.
Normally both agents might get $3.5k. Seller nets $93k.
Buyer without an agent submits an offer-to-purchase for $96.5 and in the offer states he is representing himself and the seller agent will get 0 commission for the buy side. The seller still nets approximately same amount.

The selling agent has a fiduciary obligation to act in the best interest of his client. If it is the best offer then the agent should not impede the sale (although I am a realist and know it happens).

The offer-to-purchase is quite a generic fill-in-the-blanks document. You need a lawyer anyway, so why not get her to help you fill it out? You may end up paying the lawyer a bit extra but likely less than the commission a realtor would get.

G416: Again they’d be dumb then. If I had a bunch of offers to present, and they all had buyers agents except one, I’d definitely want the sellers to accept the offer without a buyer’s agent! Even if I had to drop my commission to get it through (I’d rather get 3.5% of a sale then 2.5%).

FT: Yes, I agree, but its unfortunately not a given… its only at the 11th hour where its make-or-break that a commission reduction comes into play. It’d be nice if it was standard operating procedure (”oh, you don’t have a buyer’s agent? I’ll reduce my commission to 3.5% then”).

Another thing to add to home buying costs, which only really applies to new construction, is window coverings. Unless you want to live with sheets taped over your windows for 6 month, best to budget for some blinds right off the bat. These could be home depot specials for 150$ a window, or custom made hunter blinds and valances for 1000$ a window. Just keep in mind if you cheap out at the start, you’ll probably end up replacing it shortly due to stuff breaking or it just looking like crap.

You usually make a conditional offer on a condo subject to obtaining and reviewing the status certificate. This is how you find out how well the condo corp. is managed financially.

Factor in title insurance which most mortgage companies require you to obtain as a condition of funding. The cost of title insurance is pegged at the value of the home. A $250K condo in Toronto has title insurance costs of approx. $250.00

Mr. Cheap, I think it really depends on the agent. If you buy/sell through the same agent, and the 2.5% difference makes or breaks the deal.. then i’m sure that some agents could be convinced.

The thinking was, they obviously want to sell the house and get their commission, if they’re willing to give half to the buyer’s agent, they should be willing to give half to me to get the deal done.

Unfortunately real estate agents are greedy in a dumb way, and supposedly their perspective (according to a more knowledgable friend) is that buyers who show up without agents are ignorant and “ripe for the plucking”.

So get a buyers agent (just don’t be so foolish as to sign an exclusive agreement). If they aren’t there, you’re not going to get their cut, so you might as well use them.