In our experience it is rare to find someone who purposely makes a property purchase with the intention of selling a house within 1 year. Even the most seasoned “house flipper” can say that timeline might be a bit compressed, especially if any improvements or upgrades are needed.
But life often throws curveballs and there are many circumstances when property owners need to sell the home, shortly after purchasing it.
What makes this situation risky, even if the value has increased in that short time is the amount of fees associated with buying and selling a home in Vancouver.
The Challenge: Expenses of Buying and Selling a House Within 1 year
Home Buying Expenses:
First to consider is the Property Transfer Tax.
Property Transfer Tax is paid by the buyer and and is based on a sliding scale; the more expensive the home, the higher the tax.
The general property transfer tax applies for all taxable transactions. The general property transfer tax rate is:
1% of the fair market value up to and including $200,000
2% of the fair market value greater than $200,000 and up to and including $2,000,000
3% of the fair market value greater than $2,000,000
Moving and Storage Costs:
- With the average move of a family-sized home costing thousands of dollars you understand how its not fun to do it twice in 12 months.
- All Canada Movers has a great price estimating calculator where you can compare prices from multiple moving companies.
Home Selling Expenses:
- Realtor commission:
- In BC commission is paid be the seller for both agents
- Here is a helpful guide we produced explaining all the costs involved when you sell your home.
- You can’t forget about the lawyers. In order to facilitate a property transaction you need to file the proper paperwork and ensure the property is legally suitable to sell. This is where the lawyers come in and handle all the paperwork. This cost does vary depending on the lawyer and the size/complexity of the sale but usually ranges between $500 – $1000.
- Mortgage penalties
- Before you decide to officially sell your home it’s important to talk to your mortgage provider to confirm the penalty amounts to break the mortgage terms.
- If you have a lower interest rate the penalties might be excessive so do be sure to check with your lender.
Challenges of a Quick Turn-Around Sale:
To everyones benefit all market transactions are publicly viewable. This means most will be aware of your recent purchase date. If you try and increase the price more than market value and have not made any noticeable improvements or upgrades this might deter potential buyers. It could also raise speculation that there might be unseen or undisclosed issues with the property.
Strategies to Position Yourself for Success:
- If you can, wait, don’t sell that fast and build more equity.
- Know the market, a few months wait might result in a higher price.
- If its a financing issue, talk to your financial institution or lender and explore your options to refinance.
- Consider renting the space, the rental market is incredibly competitive in Vancouver and that rental income could be useful.
If you still have lots of questions and are looking for some professional advice from Vancouver-area experts, click the button below to schedule a free consultation.