Am I Going To Lose My House?

This is a question that most people are not asking. Not out loud anyway.

There is no doubt that the economic outlook is far from rosie. From a global standpoint it is just down right ugly. I can assure you that today I am not only proud, but darn lucky to be Canadian. According to the PM we are in a good position to weather this storm.

This is not a political statement in anyway. I am still not sure who I am going to vote for so I am not leaning one way or the other. This is a statement on the housing market and the fears of buyers and sellers in Waterloo Region and Wellington County.

As mentioned in a previous post I am selling my home. I had a gentleman come through yesterday. The first question he asked me was not "How big?" or "How much?" but rather "What are your thoughts on housing with the US economy?" Seems a little strange for a home buyer to be asking a home seller about the economy in another country, no? My answer to him was based upon conversations I have had with friends and colleagues and went something like this; "The Canadian economy is closely linked to the US, yes, but our housing issues and exposure to the sub prime mortgages is nowhere near the same. The US exposure is around 40% and Canada is around 4% (I am going with stats from a CFP I know and have not verified)."

As a business owner, father and chief bread winner I to am concerned about where the economy is heading. Am I panicking? NO. In order to avoid a self fulfilling prophecy we need to continue to spend and drive the economy. Yes we should spend smart. Yes we should spend cautious. Yes we should spend. The cost of selling a home can be outrageous so if you find yourself in a situation where you need to sell, or just want to sell you need to ensure you weigh ALL of the costs.

So lets run through a scenario. As an average person you purchase an average detached home for the average price. For calculating purposes lets round it to $300,000. Let's also assume that you are moving up from your "starter home" that is valued at $250,000. What costs can you expect at closing? Now for the sake of safety I ALWAYS aim high on expenses. If you can swing things with high estimates than life is great when they come in low.

Land Transfer Tax
$2,975

Movers
$1,500 (rough estimate)

Lawyer
$1,000 (can vary depending on circumstances)

Home Inspector
$500

Appraisal Fee
$250

Mortgage Penalty
$2,000 (avoidable if your mortgage is portable)

Sundry Expense (utility hook up etc)
$250

Marketing Your Home for Sale
Now you have a couple of options with this one.

MLS
$250,000 x 5% =$12,500 + GST = $13,125

or

Private Sale
$1499 + GST = $1573.95

So depending on what angle you choose to market your home your closing costs can vary between $21,600 or $10,048.95.

As we head into the Economic "storm of the century" and the "bleakest time since the Great Depression" when an opportunity arises and you find yourself putting your home on the market. Spend smart, Spend cautious.

M