Who pays what?

What does the buyer pay

For any transaction, it is strongly recommended to carry out a pre-purchase inspection by an inspector or a professional chosen by the buyer so that he buys with full knowledge of the facts, even if the seller has had a pre-sale inspection done. Other expertise could also incur costs and could be negotiated with the seller, for example, a water test, a pyrite, soil, iron ocher or radon test, or even carry out verifications of the installations. septic.

When signing the deed of sale, which can occur at different times of the year, the notary will distribute certain charges , such as school taxes, municipal taxes, fuel oil. If it is a multi-unit building, the notary will distribute the rents collected in advance. In the case of a joint ownership, the common expenses and the special contributions could also be part of a distribution.

In addition, the notary will charge fees for his work which are generally for the drafting of the deed of sale, the deed of loan and the publication of the deeds in the Land Registry. The notary could recommend that the buyer take out title insurance if the seller's titles are not completely clear. This could be relevant in the case where, for example, there is a minor encroachment (such as a shed roof encroaching on the neighboring lot), a swimming pool installed on a public utility easement, etc.).

The "Commission"

Remuneration to the real estate broker, known as “commission”, is based on free competition and is not set by the Real Estate Brokerage Act or by the OACIQ or by any other law. Generally, it is established according to a percentage of the sale price of the building and it is usually paid at the time of the signing of the deed of sale. It can also be fixed or hourly, and can be paid as soon as the services are performed. Since this is a service contract, the goods and services tax and the Quebec sales tax apply to the remuneration to be paid.

In the case where the seller has also chosen to do business with a broker, compensation sharing conditions are provided. Thus, part of the compensation amount provided for in the seller's brokerage contract will go to the buyer's broker and will be deducted from what is provided for in the purchase brokerage contract. It is therefore possible that the buyer will not have to pay the compensation provided for in his brokerage contract to purchase!

Here is an example: the brokerage purchase contract provides for a compensation of 3%. The buyer's broker will receive a compensation sharing of 2% provided for in the sales brokerage contract. The buyer will have to pay 1% of the price of the property purchased to his broker.

Other costs to be expected

Once officially the owner, the buyer will have to pay the transfer duties well known as the “welcome tax”.

There will also be moving costs and connection costs for various services (electricity, telephony, Internet, etc.). There may be minor (eg painting, window dressing) or major (repairing a room such as a bathroom) work to be done.

In short, it is recommended that you budget for the equivalent of at least 3% of the value of the property to cover the costs of taking possession and moving in. For a $350,000 property, that's $10,500. This is a significant amount!

This article does not mention all the costs to be expected, but of course, it lists the most common ones. Joining a real estate broker to represent you allows you to take advantage of the experience of a professional , but also of all the protections offered by the Real Estate Brokerage Act .