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The federal government has discontinued the First-Time Home Buyer Incentive, a much-criticized program aimed at improving housing affordability for new buyers that saw muted uptake in major markets.

Canada Mortgage and Housing Corporation (CMHC), the national housing agency, said in a statement on its website that the program was winding up, with no new or updated submissions to be accepted after midnight ET on March 21.

Applications resubmitted after that date will be subject to a manual review, with review requests to be submitted no later than midnight ET on March 25 and no new approvals to be granted after March 31.

Introduced in 2019, the Incentive was aimed at reducing monthly mortgage payments for qualified first-time buyers through a shared-equity scheme. It offered a contribution of 5% or 10% towards the purchase of a newly constructed home, and 5% of the purchase of a resale existing home or new/resale mobile or manufactured home.

Still, that shared-equity component, which meant the government would also benefit from the potential future sale of a home, proved unpopular with buyers, who would have to repay the Incentive either after 25 years or upon sale.

The program faced challenges from the off. In 2020, federal Conservative MPs Tom Kmiec and Stphanie Kusie slammed its cost and low levels of consumer interest, urging CMHC to topdeo the scheme,  after an annual report showed its uptake lagged far below projections.

Mortgage Professionals Canada (MPC) also criticized the Incentive at its 2022 summit, when vice chair Veronica Love said the scheme was “simply failing” with data showing participation in the program was less than a third of what the government had originally envisaged.

Between its launch in September 2019 and the end of March 2021, the program had seen  LESS THAN 10,000 sucessfull applicants across Canada with Edmonton and Calgary accounting for nearly 2,000 of that total.


The Facts About Real Estate Fees
 January 10 2024     Posted by John C Filice

The Facts About Real Estate Fees

Understanding the various fees in the Canadian real estate market may seem complicated, but with a little knowledge, you can navigate the process easily. Whether you are buying your first home, investing in a rental property, or selling your current residence, knowing the fees will prepare you to make informed decisions.

What are Real Estate Fees?

Real estate fees, often called commission, are payments made to real estate agents when you use their services. These fees are usually a percentage of the property's sale price. In Canada, these fees can vary significantly based on the province, the real estate agency, and the specifics of the property transaction. Here's what you need to know:

Types of Real Estate Fees

Commission for Selling Agents

The most common fee is the commission paid to the real estate agent that is representing the seller. This fee is often split with the buyer's agent. For commission rates, ask your agent what's typical.

Commission for Buying Agents

Buyers do not directly pay a commission to their real estate agents. Instead, the buyer's agent usually receives a share of commission from the seller's agent. This arrangement means buyers don't need to factor in additional costs for their agent.

Fixed Fee Services

Some agents offer fixed fees, which can be an economical option for sellers. These are flat rates for services regardless of the property's sale price.

How are Fees Negotiated?

Real estate fees are not set in stone and can often be negotiated. Sellers can discuss the commission rates with their agents before listing their property. Factors influencing this negotiation include the current state of the market, the expected ease of selling the property, and the breadth of services offered by the agent.

Understanding GST/HST in Real Estate Fees

Depending on where in Canada you live, Goods and Services Tax (GST) or Harmonized Sales Tax (HST) applies to real estate fees. This means that the commission charged by agents will have either GST or HST added, depending on the province. It's important for both buyers and sellers to factor this into their budget.

Additional Costs to Consider

  • Legal Fees: These are paid to a lawyer or notary to handle the legal aspect of the real estate transaction.
  • Home Inspection Fees: Buyers usually pay for home inspections before purchasing a property.
  • Land Transfer Tax: In most provinces, buyers must pay a land transfer tax which varies based on the property's value. Consult your agent to find out if this applies to you.

Tips for Buyers and Sellers

Understand Which Services are Included

Your agent's fees will vary depending on what they offer. A higher fee might include additional services like professional photography or virtual tours, and these can be great extras that draw in potential buyers.

Budget Accordingly

Factor in all potential fees and taxes to avoid surprises, and know what your mortgage limit is. The better informed you are, the less stressed you'll feel when purchasing your new home.

Negotiate Wisely

Don't hesitate to negotiate the commission with your agent. The final fee should reflect both the market conditions and the services provided.

Transparency and clear communication is the key to a quality transaction between you and your real estate professional. When you understand the different fees, how they are calculated, and what additional costs you can anticipate, you can navigate the real estate market confidently. If you have questions about this process, reach out!

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