When buying a home, there are four out-of-pocket expenses that you should be prepared to pay:
1. Your due diligence deposit. Our purchase contract was revised a few years ago and now stipulates that the buyer make a non-refundable due diligence deposit to the seller. This deposit does credit back to the transaction as long as you make it to the closing table. The due diligence deposits can range anywhere from $500 to several thousand dollars, depending on the price of the property and the competitive pressure against the property.
2. The earnest money deposit. This is another deposit from the buyer to the seller, in addition to the due diligence deposit. Like the due diligence deposit, the earnest money deposit credits back to the transaction at closing. The earnest money deposit can range from $1,000 to several thousand dollars, again depending on the price of the property and the amount of pressure on the property at the time of contract.
3. Home inspections. A general inspection, termite inspection, and radon inspection are the big three that you’ll want to order. Home inspections range from $700 to $800 overall. That said, there may be additional inspections required based on what the initial inspections find. If the property has a well or septic tank, those require their own inspections. Generally, though, expect to pay $700 to $800. Those expenses can be moved to the settlement statement, but it’s good to know that amount up front for planning purposes.
4. Other fees and service costs. Depending on your lender, you will have to pay some costs for the appraisal process, application fee, and more. These other services usually cost a few hundred dollars.
These are the four main costs that you should plan for when buying a home.
If you have any other questions about the home buying process or our current real estate market, just give me a call or send me an email. I would be happy to help you!