Humber Real Estate - Course 2, Module 5, The Financial Aspects of the Buying and Selling Process and the Role of Third-Party Professionals Questions and Answers

What are some examples of common expenses that a seller may incur in a typical real estate transaction? - Answer-- Home stager - Lender (i.e. a cost associated with discharging a mortgage early) - Surveyor - Lawyer - HST or capital gains tax - Moving expenses What tasks will a lawyer complete when working with a seller? - Answer-- Review the Agreement of Purchase and Sale - Note any deadlines to ensure the transaction proceeds as scheduled - Respond to any questions or concerns received from the buyer's lawyer - Fulfill any other requirements of the transaction - Ensure that prepaid expenses are returned to the seller by way of adjustments and that they have settled any outstanding property tax or utility payments before closing - Transfer the property title to the new owner On what types of services is HST applicable on? - Answer-Lawyer fees, brokerage fees or commissions (if applicable), and moving costs. When is capital gains tax applicable? - Answer-When there is a capital gain realized on the sale of a seller's rental or investment property, or non-principal residence. When would the capital gains tax be payable? - Answer-On the seller's next income tax return.If a seller asks you for an estimate of the capital gains tax payable, can you provide this service to your client? - Answer-No. The seller should be advised to contact their accountant for an estimate as this is beyond the expertise of a salesperson. Define 'Adjustments' when referring to the sale of a property. - Answer-Costs that are allocated between the seller and buyer on closing. It could be a debit or credit to either party depending on the situation. What are the most commonly adjusted for expenses? - Answer-Unmetered utility costs and property tax. What are some common expenses buyers will encounter? - Answer-- Property inspector - Appraiser - Surveyor - Lawyer - Land transfer tax and HST on various services - Commission - Moving expenses - Expenses related to adjustments made on closing What does an inspection report by a Property Inspector cover? - Answer-Information about the physical structure, including the roof, attic, walls, floors, ceiling, windows, doors, insulation and all other visible components of the structure. The mechanical systems are also inspected, including the condition of the heating system, central air conditioning, electrical, plumbing and other systems. Who normally pays for the appraisal cost of a house during a sale? Who requires an appraisal to be completed? - Answer-- The buyer pays - The lender requires it What can a surveyor's fee depend on? - Answer-The property's size, shape, terrain and accessibility.The commission paid to the brokerage(s) is most commonly paid to the listing brokerage by the seller's lawyer (as per the terms of the seller representation agreement) and appear as an ___________ __________ on the Statement of Adjustments. - Answer-Adjustment item Note: Sometimes the buyer may be obligated to pay commission to the brokerage that is representing them under the terms of a buyer representation agreement. In those cases the buyer can pay the commission directly to their brokerage or instruct their lawyer to pay the fee. How long is a seller responsible for costs associated with the property? - Answer-The day before closing. What are the criteria to quality for the First-time buyers refund / tax credit? - Answer-- Canadian citizen or permanent resident of Canada - 18 years of age or older - Must occupy the home as a principal residence within 9 months of registration - Cannot have owned a home anywhere in the world (this is confirmed by signing an affidavit with a lawyer.) - If the purchase has a spouse, the spouse cannot have owned an eligible home or had any ownership interest in an eligible home anywhere in the world while he or she was the purchaser's spouse. (This is confirmed by signing an affidavit with a lawyer.) If they have, then a refund would not be available to either spouse.