Thinking about purchasing a home? Here are 5 fees many first time home buyers aren’t aware of prior to their home search.
1) Earnest Money
Earnest money is used as the buyer’s way of showing a commitment to a home. The amount is typically about 1% of the purchase price and is given in good faith that they will act in accordance with the contractual obligations of purchasing. A few facts about it:
- It is refundable as long as the buyer acts in accordance with the contract.
- The sellers do NOT put down earnest money, only the buyers.
2) Home inspections
Home inspections are one of the most important aspects of purchasing a home. Inspections could include radon, sewer, roof, HVAC, mold…etc. This part of the contract allows you to perform whatever tests on the property to ensure you know what you are buying. This can include but is not limited to radon level tests, a sewer scope, a roof inspection and mold tests. Home inspections prices vary depending upon the size of the home and tests being performed, but generally, run between about $300 – $800. In addition to the general inspection, the aforementioned add-ons typically cost around $100 each.
Surveys are used when a property boundary is in question. Sometimes, the fence isn’t always in the right place! Surveys come in many shapes and sizes, including everything from a 1-line examination to a full measurement of all 4 property sides. Surveys can range in cost from a few hundred dollars to 5 figures depending upon what you want done.
The appraisal is the lender’s way of ensuring the bank (or lending entity) is lending the correct amount of money for the property you are purchasing. They double check the value and give the bank the green light to initiate the loan.
5) Closing costs
Closing costs are a general term for the fees assessed during the closing process. This typically includes whatever fees the title company is charging for signing the paperwork as well as general document preparation fees. The closing costs are typically split between buyer and seller, and amount to less than $1,000. One thing not everyone knows is that in Colorado, the seller pays for the commission of both real estate agents, so as a buyer, you won’t get stuck with the bill.
Have more questions about the process? Feel free to contact us today