10 Simple Ways to Help Keep Closing Costs Down
By Tim Janzen, Notary Public
Here are some simple tips to help you keep some of your costs down when you are buying or selling a house.
- Do your homework early: if you are buying, organize inspections and investigations early, so you can address any problems that arise before closing. Find out what utilities you will need, and get them organized. Get your insurance in place. Doing this work on closing could incur serious costs or delays – imagine finding out the day before closing that there was a grow op in the garage you never inspected! There goes your mortgage and your insurance, and your costs just skyrocketed. If you are selling, organize when you will cancel your insurance, and get final meter readings set up.
- Don’t assume others know what you want: hire good people to help you, then tell them early, often and clearly what you want. Your broker, movers, REALTOR® and your notary all know that this is an incredibly stressful time in your life, and we’re here to help, but in the end, it’s your deal…. It’s up to you to tell us what you need, so we have the best possible chance of making it work for you. Ask as many questions as you want, no matter how stupid you might think they are – the only stupid question is an unasked question. Repeat yourself if you need to. Repeat yourself if you need to. Repeat yourself if you need to. (See? How silly do I feel writing that, but you get the point!) The earlier you bring up a potential issue, the better (and less expensive), for everyone.
- Keep it simple: you can’t avoid every “wrinkle”, but the more wrinkles in your deal, the more expensive it is for you. Wrinkles include things like having unpaid liens or taxes on properties you are selling; being a first time home buyer; buying certain kinds of properties over others; using an “internet” bank (rather than a “bricks and mortar” bank) for a mortgage; using a Power of Attorney; or getting your purchase funds from other family members.
- Get your ID in order: you need 2 pieces of current, valid, government-issued ID, and the names on your ID must match each other. For example, the names “John M. Smith”, “John Smith” and “John Mark Smith” do NOT match, even if they are all referring to you! We need to be able to read the ID issuer name, your full name, the ID number, and any expiry dates. Your Costco card, library card and bus pass will not work. Not having proper ID could cost you thousands of dollars, or a seriously delayed or even failed deal.
- Avoid “back to back” deals: if you are selling one house and buying another, try not to set the completion dates for both on the same day. Try to give us at least one day between closings, especially if the properties are in different towns. This will help us cut down problems immeasurably.
- Don’t rush to close! If you can set your closing date at least two weeks after the subjects come off your contract, you will eliminate a number of rush fees, potentially saving you several hundreds of dollars.
- Don’t leave town: just because your contract is signed doesn’t mean your work is done. If you are out of town in the week before closing, or for the day or two around closing, you will incur extra costs, and, depending on where you go, you might cause yourself some serious closing problems. Imagine trying to find (and pay for) a notary wherever you’re going who is fluent in English, able and willing to take your signatures, willing to act as our agent for ID verification, and then organizing getting the documents back to us properly, all the day before closing! Try to schedule any trips for 3-5 days after the closing date. It will save you hundreds of dollars.
- Plan your movers carefully: the possession date and time you negotiated is when the buyers get to move in, not when the sellers have to start moving out! If you are selling, try to get your possessions out at least a day before completion. If you delay your buyers’ movers, you might have to pay for their costs as well as your own. If you are buying, arrange with your movers to get to the new place well after the possession time, not on or before, or you could be paying the movers to sit on the lawn and watch the sellers clear out. If it helps with timing, consider paying your movers to store your stuff overnight, so you’re not still moving at 10:00 at night.
- Have your money ready: especially if you are buying, make sure you can access your funds easily, so you don’t unintentionally delay your closing while we wait for your money to arrive or become available. If your money is invested, get it liquid. If it’s in an “internet” bank (Tangerine, or PC Choice Financial, say), start the transfer process early – it might take 3-5 business days. If it’s in an RRSP, give yourself lots of time to fill in the right paperwork, and address tax questions. If your money is coming from another source – maybe parents? – check with your broker or lender – you might have to have that money in your bank account for several months before you can use it. If you are selling, make arrangements to come get your money the next business day after closing!
- Use a REALTOR®: if you are doing a “private” sale, your legal costs will most likely be higher (especially if you are buying), for several reasons. For example, your contract might be missing certain important elements; you may spend time asking your notary questions your REALTOR® would normally have helped you with; or you may have unintentionally negotiated a deal which is difficult or impossible to carry out.