Beware The Hidden Costs When Buying And Selling Your House

Beware the Hidden Costs When Buying and Selling Your Home

As Canadians, we have been told from a young age that owning a home is the best financial move you can make.

And while it may be the best move for some, others may be better off renting.

If you are considering buying a house or moving into a larger place, you’ll want to consider all of the costs involved – and there are a lot of them.

Basics like realtor fees or moving costs are usually what comes to mind when people think of buying or selling.

But what many forget to consider are the changes in lifestyle moving from one house to another ‒ and how pricey those changes can be.

For example, is your new home farther from work? And if so, what will it cost for the extra commute?

Hidden costs when buying a house

It’s not enough to simply find the house of your dreams, you need to know everything about that house ‒ the good, the bad and the ugly.

Things like property taxes, home inspections and repair work are costs every home buyer will consider. But the most savvy of the bunch know there’s more to buying a house than meets the eye.

Monthly costs

This lifestyle change is one of the biggest costs when moving into a new house. Even though these changes aren’t always directly related to the move itself, they can still potentially increase your monthly expenses in the future.

Related: The Home Buyers' Plan: Is It The Best Option For Buying A House?

Alarm systems

If you are moving into a neighbourhood that has a higher crime rate, you’ll probably want a home alarm system. If you don’t already have one, you could be paying approximately $30 per month for the service.

You’ll want to shop around to find the best deal.

In general, home alarms are offered in two ways:

  • low costs upfront with a long-term contract, or
  • substantial costs upfront with little or no contract.

Make sure you find a system that works for you and avoid paying additional charges for add-ons you don’t necessarily need.

Transportation costs

If your new home is farther away from your workplace, you could be paying more for fuel. Or, if you need to buy an additional vehicle, you’ll need to budget for the initial cost plus the ongoing monthly expenses related to a new car.

Ideally, you should consider buying a home that is a reasonable distance from your work, shopping centres and major transportation routes.

If you live in a larger city, you’ll want to consider if rapid transit is an option in order to reduce your transportation costs.

When I moved into my current home, it was farther away from my work. But because the house is located near rapid transit, I didn’t incur any additional fuel costs.

Home utilities

If you are moving into a larger home, you’ll likely be paying more in utilities going forward as bigger homes cost more to heat. When buying a home, you’ll want to factor this into your monthly budget and make sure you buy only enough square footage for what you actually need.

You can reduce your utility bill by investing in solar panels to reduce your electricity costs as well as insulation or upgraded windows to reduce your natural gas bill.

Property taxes

If the house you’re buying has a higher assessed value than your current home, you will likely be paying more in property taxes each month.

Make sure to check the assessed value of the home to get a better idea of what the annual taxes are compared to what you pay now.

Upfront costs

Along with monthly expenses, there are other additional costs that you may have to pay upfront when buying a home:

  • New furniture. If the house is bigger than your current home, you’ll likely need to buy new furniture to fill out each room.
  • Basic repair work. Older homes usually require some basic repair work, so you’ll need to consider the cost of buying basic tools like hammers, drills, saws and ladders. If you’re moving from an apartment to a single detached home, these are things you’ll want to buy for basic home maintenance.
  • New appliances. If the house does not include appliances, you’ll want to budget for buying them immediately. Costs can vary, but you could potentially be paying $2,000 to $5,000 for new appliances.
  • Professional cleaning and painting. You may want to consider having your new home professionally cleaned and/or painted prior to moving in. Cleaning a home can initially cost hundreds of dollars depending on the time required to clean it, while painting can cost upwards of $3,000 depending on the size of the house.
  • Lock change. You may want to have the locks changed once you’ve moved in in order to give yourself peace of mind.
  • Home inspection. This will help to make sure the house is in good condition and there are no significant deficiencies. If you’re buying a condo, you might also want a professional review of the condo documents to make sure the building is being managed effectively. A home inspection can cost approximately $500 and is done at the responsibility of the buyer.

Hidden costs when selling your house

The best case scenario when listing your house for sale? You end up making more than what you put into it.

But how much selling your house can cost you might just be more than you bargained for.

Mortgage penalties

If you have a mortgage on your current home, you could be faced with a steep penalty to break it.

Typically, fixed rate mortgages have the biggest penalty and variable rate mortgages are only 3 months’ interest.

Related: Burn Your Mortgage Review

House measurements

Before you list your home, you’ll want to have it professionally measured to make sure the square footage presented on the listing is accurate.

There are companies that measure homes and properties, and most of them guarantee the dimensions they provide in the event of a dispute.

If you’re listing your home, you’ll want to have the measurements verified to reduce your liability in the event that there is a misrepresentation in the square footage of the home.

The cost of a professional measurement varies between regions, but generally starts at a few hundred dollars.

Professional appraisals

Sellers will also want to consider having their home professionally appraised.

Depending on whether you use a real estate agent or not, some can easily provide a market assessment of your home while there are third-party companies that provide a professional appraisal in case you want a second opinion.

Staging your home

Staging your home can sometimes help a place sell faster.

There are many companies that offer professional staging that can tailor the furniture requirements for your home. This is a service that is sometimes offered through a realtor, but if you’re listing your home privately, you might want to consider the use of a staging company.

Related: Budget Home Decorating Ideas

Realtor and legal fees

Along with the realtor fees of selling your home, you will also have to pay legal fees to handle the paperwork related to the sale. Legal costs vary between regions, but in Alberta, typical home sale legal costs are about $1,000.

Did we miss anything?

With plenty of hidden fees to consider, there may still be a few that have flown under our radar. So tell us…

What hidden fees did you come across when buying or selling your house?

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Editorial Disclaimer: The content here reflects the author's opinion alone, and is not endorsed or sponsored by a bank, credit card issuer, rewards program or other entity.

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michael's picture

Spot on, but...

My quibble is that somehow a home alarm is the be-all and end-all in home security. IT'S A WASTE OF MONEY shelled out monthly when you can apply it to something more useful like mortgage, property tax or utility bill.

And, something else. This whole idea of buying unnecessarily large. Park your ego to park the savings into investments.

I know, I know, we're a lot more complicated than that.

June 19, 2018 @ 12:42 pm
Marpy's picture

i am glad to see the statement "And while it may be the best move for some, others may be better off renting." As buying a house is first and foremost a "Life Style Choice". As for its value as an investment, IMO, the math if done properly will tell you that its a very poor investment. when you take into consideration all the costs of home ownership - taxes, repair costs, additional stuff you have to buy, insurance, and your time spent, etc. it does not work out to be a very good investment. The catch for many people is that if not for mortgage payments, they would not have the discipline to put money for investment aside on a regular basis. As such, poor investment or not, their house becomes their primary investment vehicle.
For those that make the lifestyle choice of buying a house, it is key not to overspend, paying it off as quickly as possible and minimizing the number of times you have to buy and sell to finally get the house you want. you would be surprised at how much it costs to change houses - real estate fees, lawyer fees, transfer taxes if any, moving costs and re-decorating the new place to name the main ones. They can add up to $50,000.00 or more every time you move. IMO - It is always better to wait a little longer till you have the money to buy what you really want. Markets are cyclical and if you wait you are also likely to catch a drop in the market like we have today.
Paying that mortgage off as quickly as possible is also critical to considerably increasing your standard of living and having that extra cash flow to invest in things like retirement. Think of it this way - those mortgage payments you make every month could end up as cash in your pocket instead - vacations, investments etc. lots of things you could be doing with that extra cash.
JMO - Have been a home owner for 40 years - purchased a house on a big lot and paid it off as quick as possible - put 2 additions on it over the years - it was a life style choice, not an investment.

June 19, 2018 @ 1:50 pm
joy's picture

And nobody is telling you that you have to move out, so more control, usually quieter. Wondering whether a condo or townhouse is better to buy? Anyone any thoughts(in Tri Cities) area, greater Vancouver?

June 19, 2018 @ 2:50 pm
Marpy's picture

With respect to town houses - free hold will cost you more but you eliminate the fees which should pay off in the long rum. Condo's or town houses, it is critical that you look at the fees and the mechanism for raising them as they are guaranteed to go up over time. Remember that with Condo's you are paying for someone else to do everything.

June 20, 2018 @ 10:42 am
Marpy's picture

With respect to town houses - free hold will cost you more but you eliminate the fees which should pay off in the long rum. Condo's or town houses, it is critical that you look at the fees and the mechanism for raising them as they are guaranteed to go up over time. Remember that with Condo's you are paying for someone else to do everything.

June 26, 2018 @ 6:13 pm
Elizabeth's picture

A hidden cost of moving is the extra expense of being busier during the real estate search, and then while packing up all your belongings, cleaning your current house, and then unpacking and doing painting and renos in your new house. It can often be months of disruption before the dust settles, which completely blows the budget, especially in the food category.

June 19, 2018 @ 5:05 pm
Marpy's picture

also note the following:

1) Beware of homes that have been staged. You should always go by the room sizes and by how you plan on placing your furnature. Staged homes are generally sparsely and unrealistically furnished so that the rooms look bigger than they are. staging should be a red flag that says "Be Careful" to any buyer. In a hot market, staging is an unfortunate fact and there is not much the buyer can do about it other than move on to other properties. In a slow market, its a different story and it could mean that the buyer automatically adjusts their offer 10% lower as the property is most likely over priced with staging making it look better than it really is.
2) For those listing, there is no real need for having the home professionally measured to determine square footage. Any real estate agent worth anything should be able to do this and you will be paying them a huge pile of money on sale so if one claims that they can not, this should be a red flag - find another agent - what else don't they or won't they do for you that you should reasonably expect?? you can also do this yourself using some basic math - accepted standards for measuring are center of wall to center of wall and width times length will get you the room size - add 2" for each wall to what you measure to get a very conservative center of wall. they key is to use the word "approximately" in all written material or advertising describing your property. Also list all the rooms and sizes separately. Anything in the basement needs to be identified as such and is not included in the overall size of the house. if you look at the wording of listings, you will learn quickly and see that the industry follows these basic rules. Save yourself some money.

June 20, 2018 @ 11:16 am

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