A lot of times home-buyers wonder what type of cost occur when they buy a house. Cost is divided into two parts. The first part is paid before closing such as earnest money, option money, inspection, & appraisal and another part such as closing cost, down payment and title fees are paid at closing. When a buyer finds a house they like in TX they will be responsible for having some money ready when they submit an offer, and that money is cashed once the offer is accepted.
Tip # 1 Earnest Money Deposit to Title Company: Once an offer is accepted the buyer will have to write a check for earnest money which is usually 1% of the sales price. For example, if the house is 200k, then the earnest money will be $2,000. This money will then be deposited into an escrow account with the title company who will be responsible for holding the funds. The check is written out to the title company and cannot be cashed by the seller unless the buyer default on the contract and does not uphold his/her part. However, if the buyer continues to purchase the home, then the earnest money will be put towards the down payment.
Tip #2 Option Money Paid to Seller: There is no set amount used for option money, but our buyers usually pay $100 for 10 days, unless the market is really hot in that case, we usually increase our option money to entice the seller. The option money is usually paid by the buyer to the seller and the seller must receive the money within three days in order for the option to take place. The option fee allows the buyers the unrestricted right to terminate the contract for any reason whatsoever during the agreed timeframe. To illustrate, during the option period, the buyer will have a chance to get a home inspection, present any issues to the seller to rectify, or just have a thinking period. For any reason, the buyer is not wanting to purchase the house, he/she can cancel the contract by signing a few documents and the earnest money will be returned to the buyer by the title company. Whereas, the option money will remain with the seller and not refunded to the buyer.
Tip #3 Property Inspection: Now that the property is under contract and earnest money/option money have been paid, it's now time to have a property inspection, termite or even a mold assessment, if needed. A property inspection usually cost our buyers $375 +75 for additional termite evaluation. The purpose of the home inspection is to ensure the house is free from any type of mechanical problems that could cause a fire or danger to your home. The inspector will check all the major components of the house to verify they are woking properly. Items that are usually checked during a basic home inspection consist of the following:
Tip # 4 Appraisal: An appraisal usually cost $375 and is ordered by the lender to provide an estimate of the property's value.This usually occurs when the contract is agreed and signed by both buyer and seller. The appraiser will pull sold comps in the area within close proximity to the property to determine the value. The goal of the lender is to verify that the buyer is not paying more than what the home is worth. For example, if the home appraises at or above the sales price, then the buyer will be able to move forward with the purchase. On the flip side, if the home does not appraise then the buyer's agent and listing agent will negotiate with their clients to come up with a solution to the problem. If the seller refuses to lower the price to the new appraise value, then the buyer can either bring the difference or walk and get earnest money refunded back.