13 Common Out Of Pocket Expenses When Purchasing A Home

All around the country, we are experiencing a crazy hot sellers market right now. What is the number one question buyers are asking? “How much does it cost to buy a home?” We work really hard helping our buyers understand all the fees that could possibly come up through the home buying process. It’s never fair to surprise a buyer with additional fees after the fact. This is one of the largest financial decisions a person can make and a lot of emotions are involved. We like to have our buyer’s prepared as much as possible upfront. Of course, not all the fees listed below will apply to everyone, but we are going to discuss common inspections and fees in general. In a buyers market a  lot of these fees can be negotiated when you write an offer, yet we are  not in that type of market right now..

As a buyer please be aware that you could, and probably will, have some out of pocket cost and up front fees to purchase a new home around Charlotte, NC. Remember, these fees may be different due to the type of the loan you’re approved for or added inspections you are wanting to have completed while in your due diligence period. 

Here are the 13 most common out of pocket expenses when purchasing a home in today's market.

1.  An appraisal fee is an upfront fee paid to the lender before they can order the appraisal on your new home. This needs to be ordered right away to ensure you make your closing date and your home is worth what you agreed to pay for it. It can range from $550 - $700. This is a buyer’s fee, sellers do not pay for this. Appraisals are typically a mandatory, lender required fee. Check with your lender, because there are some exceptions. Also, if the appraiser has to go back out and re-appraise the home, it could be an additional $150 - $200 to complete this.

2. A home Inspection ranges from $450 - $900 and is due at the time of inspection or when ordering it. This is a buyer’s fee, some sellers will have a home inspection done when they list their home. If the seller agrees to any repairs prior to closing, it’s wise to have the home inspector re-inspect the items agreed upon, this can range from $150 - $200. Check with your agent, but we strongly recommend never buying a home without a home inspection by a reputable company. This is an optional inspection yet the best inspection when buying a home. Money well worth it!

3. Radon inspections range from $200 - $400 (if you want one done). This is a buyer’s fee and not a mandatory inspection, yet strongly recommended in our area.

4. Termite inspections range from $75 - $150. If you are using a VA loan, the seller could pay for this as long as it closes. It will be a buyer’s fee if you do not close on the home. We are seeing that most pest companies are requiring the payment upfront. Talk with your lender about options at closing as far as possible reimbursement. NC is known for termites. We joke saying they are our state pet.

5. Septic inspections which could include service and pumping/cleaning, can range from $350 - $750. This only applies to homes on a septic and not hooked up to the city sewer system.

6. A survey could range from $550 - $1500 (not required by lenders in NC). This is typically a buyer’s fee if you want it. It’s wise to consider if you are considering putting up a fence, buying a large parcel of land or purchasing a home with fences around them to ensure the adjacent properties are not encroaching on your future home. These are typically easier to have addressed prior to closing.

7. Water and well testing can range from $75 - $250. This is typically a buyer’s cost unless agreed upon in the contract. This is an optional inspection. If a home has been sitting for awhile it’s wise to ensure the well water does not have bacteria in it since you will be drinking it in the future. Plus, it’s a pretty quick and easy process to remedy it should this be the case. 

8. Down payment costs depend on the loan type you are approved for. This can range from $0 for VA, 3.5% for FHA (with PMI for life of the loan),  3 -5% up to 20% for Conventional loans. Check with your lender, some of these fees can be tacked onto the backend of your loan as well as to see if you qualify for any Down Payment Assistance programs..

9. Earnest money is money you put down on a home when you write an offer. It’s due within 5 days from an executed offer.  This shows the seller you are serious about your offer. The check is made out to the closing attorney and held in a trust account (at the closing attorneys office) until the day of closing and typically ranges around 1% of the contract sales price. Your agent can help answer the right amount to put down during the contract time. 

10. A Due Diligence fee is highly recommended in this market. It could be anywhere from $1000 on up to in some cases $20,000, I know that seems crazy! The most important thing you need to remember is it’s a NON refundable fee if you back out of the offer for ANY reason. Now, if you close on the home, this money will be credited back to you at closing. This is a fee the seller will get if you back out of the contract during the inspection period. The check is made directly to the seller and due immediately once the offer is accepted and prior to any inspections. Check with your agent for specifics and advice. Something to keep in mind, in this crazy market most sellers are not doing any repairs no matter what's wrong with the home, so please look over the home prior to writing an offer.

11. Closing cost, these are fees that are used to set up your initial escrow accounts for taxes, insurance and a few other lender fees as well as attorney fees. Depending on how much the seller is willing to pay towards your buyer’s closing cost, you could be left with a remaining balance that will be determined within 24-48 hours, if not a few hours prior to closing. In this crazy market, we are not seeing the seller agreeing to contribute anything towards the buyer’s closing cost. That amount will need to be wired to the closing attorney prior to closing on the home.  You can not bring a personal check. This is an amount on top of your down payment, Your lender can give you a Good Faith Estimate to help understand the bulk of the money you will be required to have at closing and prior to an offer. 

12. Appraisal Gap costs are something we are all seeing with the strong sellers market. Since the majority, if not all homes that go on the market get multiple offers, we are seeing attorney drafted addendums where the buyer is agreeing to make up the difference in the contract price and the appraisal amount to ensure they are getting the home they desire. This can range from $10,000 on up. This is an additional out of pocket expense on top of the downpayment and closing cost. Please talk with your agent and lender. 

13. HVAC inspections can range from $175-550 depending on how many units are involved. During this inspection they typically service and inspect it. The home inspector will look over the system yet they are only going to comment on items that come up during the inspection and it’s up to the buyer to have a certified HVAC company perform an inspection if the seller is not willing to do it.

Depending on the type of property you are purchasing, this could result in other optional inspections not listed above.

Not all these inspections are mandatory, or will apply with the type of loan you have, so don’t be scared.  It’s always good to know how much it could cost you to buy a home around Charlotte, NC. Of course, as your agents, we will do everything we can to negotiate hard for you and help lower your out of pocket expenses. Call 704-897-7841, text, or visit our website if you want more information about buying a home!