Tips & Costs Associated with Buying a Home 🏠 🇺🇸

Sep/29/2025

💵 Upfront Costs (Before Closing)

1. 💰 Should be able to demonstrate a Down Payment of at least 3%–20%. 

2. 🤝 Earnest Money Deposit: Typically 1%–3% of the purchase price, depends on the transaction & typically submitted once all subjects have been removed. 

3. 🔍 Home Inspection: $300–$500, depends on provider selected + size & details of property, as well as total services required.   

   Tip - In Real Estate, Patent & Latent defects are terms used to describe problems with a property, but they differ in visibility, plus disclosure requirements. 

   Here's a clear breakdown: 

   Patent Defect:

   A defect that is obvious or visible upon a reasonable inspection.

   Examples:

   Cracks in walls

   Leaking faucets

   Broken windows

   Key Point: The buyer can see or discover it during a normal inspection. Sellers are generally not legally liable for patent defects if they are obvious.

   Latent Defect:

   A defect that is hidden or not discoverable by a reasonable inspection.

   Examples:

   Structural issues inside walls or foundation

   Plumbing or electrical problems not visible

   Termite damage hidden under floors

   Key Point: The seller may be legally responsible for latent defects if they knew (or should have known) and failed to disclose them.

   ✅ Summary in short:

   Patent defect: obvious, visible, buyer can notice.

   Latent defect: hidden, not obvious, seller may be liable

4. 🏠 Lot Survey - Typically costs around $300–$1,000 for standard single-family lots, but larger or complex properties could run $1,000–$2,500+.

   This is usually required in a residential sale when there’s a need to verify the property’s boundaries, structures, and easements, typically requested by certain Mortgage or Title Insurance providers, or Subdivision applications etc.  Even if not strictly required, it can assist with avoiding any potential legal disputes in the future. 

5. 📏 Appraisal Fee: $300–$700 - Depends on property type & location. Mandatory for most Lenders if obtaining Financing. 

6. 📄 Credit Report Fee: $30–$50 - Most Financiers will require a fresh credit report.  You can check your Score/Reports at no charge $0, more info on my Blog - Free Credit Report (3 bureaus) & how to dispute any Inaccuracies

7. 🏷️ Title Search: A new Title Search should be conducted to ensure the property is not clouded (no irregularities, or deficiencies). Typical range: $75 – $250 for a standard residential property.  See my Blog post - Types of Deeds & the difference between Title

8. 🏢 HOA Resale Package: Usually around $100-$500, depending on details;  normally paid by the Seller.  When purchasing a property governed by a Homeowners Association (HOA), you are entitled to receive an HOA resale package. This provides essential information about the community's rules, financial status, and any obligations tied to the property etc. 

   A typical Package contains:

   Resale Certificate: Details on outstanding fees, special assessments, unpaid fines, pending violations, and any pending litigation involving the HOA. 
   Clark Simson Miller

   Governing Documents: Includes the CC&Rs (Covenants, Conditions, and Restrictions), bylaws, articles of incorporation, rules and regulations, and financial statements. 

   Reserve Study: Information on the HOA's long-term financial planning for major repairs and replacements.

   Board Meeting Minutes: Insights into recent decisions and discussions within the HOA.

🧾 Closing Costs (Paid at Closing)

1. 📜 Escrow Fees: $1,500–$3,000 (depends on property price, complexity &  escrow company selected).  Normally payable out-of-pocket, unless otherwise negotiated).  Tip - The majority of Escrow companies do not offer Legal advice, unless in-house counsel is present.  For complex matters, or if you feel more comfortable with hiring a Real Estate Lawyer, that could be an option depending on your State.  California allows both Lawyer & Escrow closings, however, may depend on the type sale.  Even if only Escrow closing is allowable, you normally still have the option to hire a Lawyer for "ILA"  (Independent Legal Advice), prior to signing anything, cost will vary. 

2. 🗂️ Recording Fees: $50–$250 (county fees to officially record sale etc). 

   Once recorded: The original Deed (or a certified copy) is mailed to you, usually a few weeks after closing, in some counties it can take longer. 👉 You don’t need to hold the physical deed to prove ownership. The fact that it’s recorded in county records is what makes you the legal owner.

3. 💸 Real Estate Transfer Taxes: Typically based on local guidelines but can generally be broken down into three categories - State, City & County, unless exempt. This cost is usually covered by the Seller, however, may depend on negotiations; certain transactions may also be exempt. Check with your Advisor, and or applicable government website for more info. Here is a basic calculator: www.ortconline.com/TransferTaxCalculator

4. Usually varies by State if applicable: In California, the cost is typically $1.10 per $1,000 of sale price (aprx $1100 on a $1 million sale) 

5. Property Taxes: Normally prorated & depends on move-in date.  You could either owe $0, owe the Seller, or they may be required to credit you. Any amount owing is connected to the due date of local assessments, so you only pay for the time the property is actually owned.  Escrow figures out who owes what, determining if the Seller has already paid their share, or if a balance is outstanding. 

   In Cali the 1st Installment is Due November 1st & becomes delinquent after December 10th. 

   2nd Installment: Due February 1st & becomes delinquent after April 10th. 

   Here is the LA County website for more info: 
   https://www.propertytax.lacounty.gov/

6. 🏘️ HOA Fees: (if applicable): Transfer or prorated dues.

7. 🏦 If Obtaining Financing - Loan Origination Fees: $1,800–$2,200 - Depends on Mortgage product & provider, charge is typically paid from your own resources, some Lenders may allow you to blend into financing (ask for a Loan Estimate doc for review) 

   Includes:

   a) Application processing.

   b) Document preparation.

   c) Underwriting (evaluating your risk as a borrower).

   d) Funding the loan.

8. 📊 If Obtaining Financing - Mortgage Insurance (PMI, MIP or FHA/VA Insurance etc): Depends on type of Mortgage product, amount & the provider - any fee + premium can usually be rolled into your financing. 

   PMI (Private Mortgage Insurance): Required if down payment <20% on a conventional loan.  Typical cost: ~0.3%–1.5% of the loan per year, usually eliminated once equity reaches 20%. 

   FHA Mortgage Insurance Premium (MIP): ~0.85% of loan annually + 1.75% upfront.

   VA/USDA Loans: Often no monthly mortgage insurance, may have a funding fee instead.

   (Also ask your Broker about Mortgage Life insurance, provided by most financial institutions with the premium blended into your mortgage payment, however, cost could be slightly higher than standard life insurance policies)  

9. Title Insurance: 

   Owner's Policy: While not always mandatory, the purpose is to protect you against issues that can arise after a purchase, for example forgeries or fraud etc.  It is a one-time fee that usually lasts as long as you, or your heirs have an interest in the property. 

   Lender's Policy: This protects the mortgage provider and is normally required. 

   Who Pays?  The Buyer almost always pays for the Lender's side, and the Owner's policy is covered by either the Seller, Buyer or both, depending on what is negotiated, or customary for the area.  In SoCal the Seller typically pays for the Owner's title insurance.

   Typical cost is around $500-$3000, however, depends on property specifics + area & location.

   Here is a basic $ Title Insurance cost calculator by State:

   https://www.oldrepublictitle.com/rate-calculator

10. 🛠️ Home Warranty:  Usually included with newly constructed properties.  For pre-owned, depending on the provider, the cost will vary and may cover major appliances & systems such as:  

    HVAC Systems – heating & air conditioning systems ⚡🔥

    Plumbing – pipes, faucets, drains & water heaters 🚰

    Electrical systems – wiring, outlets & circuit breakers 💡

    Appliances – commonly covered:

    Refrigerator 🧊

    Oven / Stove 🍳

    Dishwasher 🍽️

    Washer & Dryer 🧺

    Built-in microwave ⚡

    Garbage Disposal & Garbage Compactors 

    Tip - In real estate, Fixtures & Chattels are about what is included in the property sale.  Here’s the clear distinction:

    Fixture:

    An item attached to the property and considered part of it.

    Examples:

    Built-in cabinets

    Ceiling fans

    Light fixtures

    Wall-mounted shelves

    Key Point: Fixtures stay with the property when it’s sold, unless specifically excluded in the contract.

    Chattel:

    Personal property that is not permanently attached to the property.

    Examples:

    Furniture

    Freestanding appliances (like a fridge or washer)

    Rugs, curtains (sometimes)

    Key Point: Chattels are movable and generally do not stay with the property unless included in the sale agreement, or otherwise negotiated. 

    ✅ Quick way to remember:

    Fixture = Fixed → stays with the house.

    Chattel = Changeable → you can take it with you.

💳 Ongoing Homeownership Costs

• 🏛️ Property Taxes: Depends on area, in California, normally around 1% of assessed value + local assessments per year. 

• 🛡️ Homeowners Insurance: $800–$1,500/year - Cost will depend on property, provider, area & coverages selected. 

• Basic Calculator here: https://www.forbes.com/advisor/homeowners-insurance-calculator. (Note - most websites use $750k as the max replacement figure - this figure is considered a reasonable replacement cost for many single-family homes in the U.S).

• 🔧 Maintenance & Repairs:  Depends on property + service required. 

• 💡 Utilities - Varies by usage + area & may include: 

  1. 💡 Electricity – powering lights, appliances, air conditioning/heating, etc.

  2. 🔥 Gas – often used for heating, hot water, and gas stoves.

  3. 🚰 Water & Sewer – freshwater supply and sewage removal.

  4. 🗑️ Trash & Recycling – waste collection services.

  5. 🌐 Internet / Cable / Phone – broadband internet and sometimes cable TV.

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  📝 Optional / Additional Services:

  • 🏊 Pool or Spa Maintenance Fees (if applicable)

  • 🏡 Landscaping / Irrigation Water (sometimes included in HOA fees)

  • 📦 Security Systems (monthly monitoring fees)

  • 🚫 Environmental Testing - Refers to the process of checking for potential environmental hazards that could affect the health of occupants or the property’s value. These tests are usually done before buying a home to ensure there are no hidden problems.

    Common types of environmental testing include:

    Mold testing – Checks for toxic mold in walls, ceilings, or HVAC systems.

    Asbestos testing – Often in older homes (pre-1980s) to detect asbestos in insulation, flooring, or siding.

    Lead-based paint testing – Especially in homes built before 1978. Lead paint is hazardous if it chips or deteriorates.

    Radon testing – Measures radon gas levels, which can cause lung cancer over time.

    Soil & Groundwater Testing – Checks for contamination from chemicals, fuel, or industrial waste etc, especially if the property was near industrial sites.  Buying a property in Greater LA?  It might be advisable to check for any abandoned, or active Oil Wells in your area, see my Blog: Buying a Home in SoCal? History of Oil Wells & How to check areas

    Water quality testing – Ensures well water or private water sources are safe to drink.

    These tests help buyers avoid health risks, costly remediation, or future legal issues. Often, the buyer pays for these tests during the inspection period, and results can influence negotiations or even lead to walking away from the deal.

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𝒮𝑒𝒶𝓃 𝐴𝓊𝒿𝓁𝒶, 𝑀𝐵𝐴
𝒮𝑜𝒞𝒶𝐿 ℛ⁄𝐸 & 𝑀𝓉𝑔. 𝐵𝓇𝑜𝓀𝑒𝓇
𝐻𝑜𝓂𝑒𝓈 𝓉𝒽𝒶𝓉 𝓂𝑜𝓋𝑒 𝓎𝑜𝓊 🏠
R𝒾𝓈𝑒 𝑅𝑒𝒶𝓁𝓉𝓎 | 𝒯𝒯𝐻 𝐿𝑜𝒶𝓃𝓈
𝒟ℛ𝐸 𝟢𝟤𝟤𝟣𝟣𝟧𝟨𝟧 | 𝒩𝑀𝐿𝒮 𝟤𝟦𝟪𝟢𝟨𝟫𝟤
https://seanaujla.com/tips

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This Blog was written by: Sean Aujla, MBA - #SoCal Real Estate & Finance Broker - DRE 02211565 | NMLS 2480692.  Not affiliated with any of the companies mentioned in the post. 

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𝒮𝑒𝒶𝓃 𝒾𝓈 𝒶 𝓈𝑒𝒶𝓈𝑜𝓃𝑒𝒹 𝑅𝑒𝒶𝓁 𝐸𝓈𝓉𝒶𝓉𝑒 & 𝐹𝒾𝓃𝒶𝓃𝒸𝑒 𝐵𝓇𝑜𝓀𝑒𝓇 𝒷𝒶𝓈𝑒𝒹 𝒾𝓃 𝓉𝒽𝑒 𝐿𝐴 𝓇𝑒𝑔𝒾𝑜𝓃. 𝐻𝑒 𝑜𝒻𝒻𝑒𝓇𝓈 𝑜𝓋𝑒𝓇 𝓉𝓌𝑜 𝒹𝑒𝒸𝒶𝒹𝑒𝓈 𝑜𝒻 𝑒𝓍𝓅𝑒𝓇𝒾𝑒𝓃𝒸𝑒 & 𝒻𝑜𝒸𝓊𝓈𝑒𝓈 𝑜𝓃 𝓅𝓇𝑜𝓋𝒾𝒹𝒾𝓃𝑔 𝒸𝑜𝓂𝓅𝓇𝑒𝒽𝑒𝓃𝓈𝒾𝓋𝑒 𝓈𝑜𝓁𝓊𝓉𝒾𝑜𝓃𝓈, 𝓉𝒶𝒾𝓁𝑜𝓇𝑒𝒹 𝓉𝑜 𝑒𝒶𝒸𝒽 𝒸𝓁𝒾𝑒𝓃𝓉'𝓈 𝑜𝒷𝒿𝑒𝒸𝓉𝒾𝓋𝑒𝓈 – www.seanaujla.com

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 #𝒉𝒐𝒎𝒆𝒔𝒇𝑜𝓇𝓈𝒶𝓁𝑒, #𝒄𝒐𝓃𝒹𝑜𝓈𝒇𝑜𝓇𝓈𝒶𝓁𝑒, #𝒍𝒂𝓇𝑒𝒶𝓁𝓉𝑜𝓇, #𝒍𝒂𝓇𝑒𝒶𝓁𝑒𝓈𝓉𝒶𝓉𝑒, #𝒓𝒆𝒂𝒍𝒆𝓈𝓉𝒶𝓉𝑒𝒶𝑔𝑒𝓃𝓉, #𝒓𝒆𝒂𝓁𝓉𝑜𝓇, #𝒃𝓇𝑜𝓀𝑒𝓇, #𝒓𝒆𝒂𝓁𝑒𝓈𝓉𝒶𝓉𝑒𝒾𝓃𝓋𝑒𝓈𝓉𝑜𝓇, #𝒓𝒆𝒂𝓁𝑒𝓈𝓉𝒶𝓉𝑒𝒷𝓇𝑜𝓀𝑒𝓇, #𝒎𝑜𝓇𝓉𝑔𝒶𝑔𝑒𝒷𝓇𝑜𝓀𝑒𝓇, #𝒓𝒆𝒂𝓁𝑒𝓈𝓉𝒶𝓉𝑒𝓃𝑒𝓌𝓈, #𝒓𝒆𝒂𝓁𝑒𝓈𝓉𝒶𝓉𝑒, #𝒎𝑜𝓇𝓉𝑔𝒶𝑔𝑒, #𝒇𝒾𝓃𝒶𝓃𝒸𝒾𝓃𝑔, #𝒔𝑒𝒶𝓃𝒂𝓊𝒿𝓁𝒶

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#𝓁𝒶, #𝓁𝑜𝓈𝒶𝓃𝑔𝑒𝓁𝑒𝓈, #𝓈𝑜𝒸𝒶𝓁, #𝒸𝒶𝓁𝒾𝒻𝑜𝓇𝓃𝒾𝒶, #𝒷𝑒𝓋𝑒𝓇𝓁𝓎𝒽𝒾𝓁𝓁𝓈, #𝒽𝑜𝓁𝓁𝓎𝓌𝑜𝑜𝒹, #𝒷𝑒𝓁𝒶𝒾𝓇, #𝒷𝑒𝓋𝑒𝓇𝓁𝓎𝑔𝓁𝑒𝓃, #𝒷𝓇𝑒𝓃𝓉𝓌𝑜𝑜𝒹, #𝓈𝒶𝓃𝓉𝒶𝓂𝑜𝓃𝒾𝒸𝒶, #𝑜𝒸𝑒𝒶𝓃𝓅𝒶𝓇𝓀, #𝓋𝑒𝓃𝒾𝒸𝑒, #𝓂𝒶𝓃𝒽𝒶𝓉𝓉𝒶𝓃𝒷𝑒𝒶𝒸𝒽, #𝓂𝒶𝓁𝒾𝒷𝓊, #𝓅𝒶𝒸𝒾𝒻𝒾𝒸𝓅𝒶𝓁𝒾𝓈𝒶𝒹𝑒𝓈, #𝒸𝓊𝓁𝓋𝑒𝓇𝒸𝒾𝓉𝓎, #𝒹𝑒𝓁𝓇𝒶𝓎, #𝓂𝒶𝓇𝓋𝒾𝓈𝓉𝒶, #𝓅𝓁𝒶𝓎𝒶𝓋𝒾𝓈𝓉𝒶, #𝓁𝒶𝓍, #𝒷𝓊𝓇𝒷𝒶𝓃𝓀, #𝑔𝓁𝑒𝓃𝒹𝒶𝓁𝑒, #𝓈𝒽𝑒𝓇𝓂𝒶𝓃𝑜𝒶𝓀𝓈, #𝑒𝓃𝒸𝒾𝓃𝑜, #𝓈𝓉𝓊𝒹𝒾𝑜𝒸𝒾𝓉𝓎, #𝓉𝒶𝓇𝓏𝒶𝓃𝒶, #𝓌𝑜𝑜𝒹𝓁𝒶𝓃𝒹𝒽𝒾𝓁𝓁𝓈, #𝒸𝒶𝓁𝒶𝒷𝒶𝓈𝒶𝓈, #𝒽𝒾𝒹𝒹𝑒𝓃𝒽𝒾𝓁𝓁𝓈, #𝒶𝑔𝑜𝓊𝓇𝒶𝒽𝒾𝓁𝓁𝓈, #𝓌𝑒𝓈𝓉𝓁𝒶𝓀𝑒𝓋𝒾𝓁𝓁𝒶𝑔𝑒, #𝓉𝒽𝑜𝓊𝓈𝒶𝓃𝒹𝑜𝒶𝓀𝓈