Costs Associated with Buying A Home
Buying a home is an exciting milestone. Once your offer is accepted and your loan is approved, the final step before getting the keys is the closing process.
Many buyers focus on the purchase price, but it’s also important to understand the additional costs associated with buying a home. These expenses are normal in a real estate transaction and help ensure the property, financing, and legal transfer are completed properly. Below are the most common costs home buyers should expect.
Earnest Money Deposit
An earnest money deposit (EMD) is a good-faith deposit submitted when your offer on a home is accepted. This deposit shows the seller that you are serious about purchasing the property. Typically, earnest money is 1%–3% of the purchase price, although the amount can vary depending on the market and the terms of the offer. The deposit is held in an escrow account and will be applied toward your total funds needed at closing.
An earnest money deposit (EMD) is a good-faith deposit submitted when your offer on a home is accepted. This deposit shows the seller that you are serious about purchasing the property. Typically, earnest money is 1%–3% of the purchase price, although the amount can vary depending on the market and the terms of the offer. The deposit is held in an escrow account and will be applied toward your total funds needed at closing.
Home Inspection
After your offer is accepted, most buyers schedule a professional home inspection. The purpose of the inspection is to evaluate the overall condition of the property and identify any potential issues before closing. Depending on the property, buyers may also choose additional specialized inspections, such as Radon, Well Water, Septic, Electrical, and pest/termite. Home inspection costs vary depending on the size and location of the property, but buyers typically pay $500–$1000.
After your offer is accepted, most buyers schedule a professional home inspection. The purpose of the inspection is to evaluate the overall condition of the property and identify any potential issues before closing. Depending on the property, buyers may also choose additional specialized inspections, such as Radon, Well Water, Septic, Electrical, and pest/termite. Home inspection costs vary depending on the size and location of the property, but buyers typically pay $500–$1000.
Appraisal
If you are financing the purchase, your lender will require a home appraisal. An appraisal is an independent evaluation of the property's value performed by a licensed appraiser. The purpose is to confirm that the home's value supports the agreed purchase price. This protects both the buyer and the lender by ensuring the property is worth the amount being financed. The appraisal fee is usually $500–$700 and is typically paid by the buyer.
If you are financing the purchase, your lender will require a home appraisal. An appraisal is an independent evaluation of the property's value performed by a licensed appraiser. The purpose is to confirm that the home's value supports the agreed purchase price. This protects both the buyer and the lender by ensuring the property is worth the amount being financed. The appraisal fee is usually $500–$700 and is typically paid by the buyer.
Closing Costs
These costs are paid at the closing table when ownership of the property officially transfers. In most cases, buyers can expect closing costs to range from approximately 2%–4% of the purchase price. Closing costs may include Lender fees, Loan origination fees, Attorney fees, Title insurance, Recording fees, Prepaid property taxes, Homeowners insurance premiums, and Escrow account funding. Before closing, your lender and closing attorney will provide a detailed breakdown of all closing costs so you know exactly what to expect. In some cases, buyers can request seller concessions as part of the purchase offer to help cover a portion of these costs.
Realtor Commissions
In many home purchases, the seller pays the commission for both the listing agent and the buyer’s agent. However, there are situations where a seller may only offer a partial commission—or choose not to offer one at all. In these cases, the buyer would be responsible for covering the difference or the full commission if none is offered. If this happens, the commission can often be financed into your loan, and we can also request a seller concession to help cover it as part of your closing costs. I’ll always let you know up front if a property falls into this category, and we’ll explore all available options to make it work within your budget.
In many home purchases, the seller pays the commission for both the listing agent and the buyer’s agent. However, there are situations where a seller may only offer a partial commission—or choose not to offer one at all. In these cases, the buyer would be responsible for covering the difference or the full commission if none is offered. If this happens, the commission can often be financed into your loan, and we can also request a seller concession to help cover it as part of your closing costs. I’ll always let you know up front if a property falls into this category, and we’ll explore all available options to make it work within your budget.