Upfront Costs When Buying A Home
When you begin the home buying process, there is money that needs to be spent that may not be refundable if the sale goes sideways. This video explains how to navigate your way through these costs.
When you begin the home buying process, there is money that needs to be spent that may not be refundable if the sale goes sideways. Back in the day, we would simply take the needed funds from the buyer’s deposit money to pay upfront expenses but what happens when the buyer or seller cancels? Who will reimburse these funds to the buyer? The earnest money deposit will be short of those pre-paid expenses and it becomes a scramble to figure out who will make the refund. Now, many of these costs are paid up front directly to the service provider.
So what are these costs?
First, there are HOA documents. If your purchase is governed by a Homeowners Association, certain documents are required to be disclosed and handed to the potential buyers for review and these have become quite costly to obtain. It’s typical for the CC&Rs (Covenants, Conditions and Restrictions) and monthly budget documents to cost $500-600 dollars. In California, these costs are usually paid for by the seller but can also be paid by the buyer. The money for these fees are requested upfront because they are hard costs and cannot be refunded if the sale is cancelled or not completed.
Next, a HOME INSPECTOR is hired by the buyer to get a better picture of the condition of the home they are purchasing. These fees vary by region and can be $200-500 dollars to start but are sometimes calculated based upon square footage of the home to be inspected rather than a flat fee. Other inspections may be required by local municipalities such as a low-flow toilet certification or city pre-sale inspection or the buyer may choose to get more detailed inspections for sewer or septic, chimney, electrical, heating and air conditioning or soil among others. Many of these fees are paid for at time of service and not through the closing. QUESTION: What are some other fees that YOU have paid as a buyer? Leave a comment below.
Finally, the APPRAISAL FEE, which is required by the bank, is charged to the buyer whether or not the sale is completed. This might also be in the $300-500 dollar range. This one is usually paid through escrow or closing but the buyer could be asked to cover this charge if the deal does not go through.
Do you have any questions you’d like answered? Just ask them in the comments section and I’ll make a video with the most popular topics.