I want to go over the top fees and expenses that you can expect when you're buying a home.
Now, the first one and the biggest ticket item is going to be a property transfer tax. Now, the nice benefit is if you are a first time homebuyer, you don't have to worry about this unless you purchase a home over $425,000. Between $425,000 and $450,000, it's a complicated sliding scale of how much you pay, and your broker will work that out for you But anything over that amount, you're paying the whole shebang of your property transfer tax.
So if you can, start off nice and easy. Take advantage of those savings. Because to give you an an example, the amount that you actually pay on property transfer tax is 1% on the first $200,000 and then 2% on the remaining balance. So on a $400,000 home, you're paying $6,000. That's quite a big chunk, and at $400,000, a first time homebuyer gets to save that. Everyone else has to pay that.
All right? But that's the biggest ticket item. The second one is appraisals. And your appraisal is going to cost you around $260. If you're paying a lot more than that, find someone else. But on that note, do not go out and source your own appraiser and just go and get it done and think, "Oh, phew, I got this off my list." Lenders have a very specific list of people who they will approve as an appraiser.
So if you go out and get an appraisal and then take it to your lender, and your lender says, "Sorry, bucko, but this ain't on our list," you need to go out and get a second one, and now you're outputting that $260 all over again. Now, if you're working with me, I will actually let you know which appraiser we need to go to. I'll even set up the appointment for you or, rather, get in contact with them so they can set up an appointment with the homeowner. But yeah, definitely just don't go out and do that on your own. Make sure you've got someone directing you on who to go to.
Now, the third cost is for your notary or your lawyer. You can't escape this cost. You're going to have to have the notary or lawyer working on your side. And again, I'll put you in contact with someone who I trust who offers good pricing. But you're going to be looking at anywhere between $800 and $1,200. If you're paying more than that, you're paying too much. OK?
What else are we looking at? Oh, adjustments. Now, this is something that people don't even really think of until they get the bill, but things like strata costs, things like property taxes, a lot of times there is going to be an adjustment period, meaning that the current homeowner, they have already paid the property taxes or they haven't paid the property taxes and therefore they owe you money or you owe them money.
And there needs to be some sort of adjustment, because you only pay property taxes halfway through the year, which means, depending on the time of year that you move in, you'll either owe them money or they'll owe you money, and then plus strata fees, you know, there might be some adjustments there. And that typically all you'll need to budget for is just a few hundred dollars, but it's still a bill to look out for.
Now, the last expense is another one that can be a doozy, but it's very specific to only homes that you're looking at purchasing that were previous grow ops. So, previous grow ops are obviously a whole other bird, and lenders get very wary of them.
There are two things well, two types of testing that lenders will sometimes request. There is Phase I and Phase II. Phase I is where they go in and they're basically checking the air quality and making sure that everything is OK. Phase II is when they're actually going in and cutting out carpet, cutting out drywall, pulling them out and doing tests for moisture, mold, bacteria, making sure electrical is all done up well, and actually physically ripping walls down.
That, obviously, is going to cost a lot of money, and that's going to hurt your home a little bit. So, if you go with me, there are very specific lenders that only require Phase I, some that require Phase II. I would only put you in contact with those so long as they have products that fit your situation, and only put you in contact with the lenders who only require Phase I.
Because Phase I, you're looking at around $1,000. Phase II, you're looking at around $5,000 for a bill. And at the end of the day, if those tests come back bad, you may have output that money for a home that a lender won't even touch. So that's something to be aware of.