One question we are frequently asked by buyers is “Will there be out of pocket expenses for me when I buy a house or vacant property?”.
YES! YES! YES! Outside of loan associated costs, which are often rolled into the loan, buyers should be prepared to spend anywhere from $500 to $2,000 out of pocket BEFORE they ever see the closing table.
You’ve found the house of your dreams and are ready to make an offer on the house. Attached to the offer itself is an Earnest Money Deposit and possibly a Due Diligence Fee. There are no standards for these fees. In our area, many sellers like to receive 1% of the purchase price as Earnest Money, but I’ve seen offers accepted with as little as $500. The Earnest Money Deposit is credited towards the purchase price upon a successful closing. If you withdraw from the contract within your Due Diligence period, you should be able to expect a return of that money. You may also have to give the seller a Due Diligence fee. During a Buyer’s Market, with a good Buyer Agent there’s a chance one can avoid this fee but it’s not a given. This fee is negotiated between the two parties and comes off the purchase price upon a successful closing. If the Buyer doesn’t close, the fee is the sellers to keep.
Once there is a contract, Buyers can expect to pay for Home Inspections, Pest and Wood Destroying Insect Inspections, Radon Inspections and any additional inspections like water testing or lead based paint. The Home Inspector may also recommend inspections by licensed electrical, plumbing or roofing contractors. If the house has a swimming pool or fireplace, inspections of those amenities may also be in order. In our area, these inspections might run anywhere from $350 to $1,000.
Closings in NC are typically facilitated by attorneys and yes, there are fees for that service. Depending upon the price of the house and the complexity of the financing, this fee for the buyer may run anywhere from $500 to $1,500.
The Buyer’s lender will also charge fees outside of the “loan package” fees. Expect to pay an application fee, a credit report fee and the appraisal fee. The application and credit check fees are usually nominal…less than $50. The appraisal is usually $450 to $600 for houses under 4000 square feet.
It’s always a good idea to have a survey done of any property you purchase. Many states require sellers provide a new survey, but not NC. There’s a chance buyers might be able to split the cost with the seller, but they are under no obligation to contribute towards a survey at all. Depending upon the size of the property, surveys may run $500 plus.
Will there be out of pocket expenses for the buyer? Absolutely. Ask your REALTOR to review what you should expect to spend as a buyer. This is one area of the house buying process you don’t want any surprises...be sure to read Randy Mitchelson's comments in #6 below!