Buying a home is likely one of the biggest financial decisions you will make in your life.
When you begin your home hunt, there will be fees associated with the home purchase, in addition to the purchase price of the actual home. I always like to inform my clients upfront about what these costs are so that they can be prepared for them and plan accordingly.
Here are the most common fees that a buyer can expect to see and be responsible for when purchasing a home.
- Option Fee. Option money is a very important piece of a buyer’s contract. When a buyer pays an option fee, they are purchasing the unrestricted right to cancel the agreement within the period specified in the contract. Generally, you can expect to pay between $250-$1,000 depending on the property and the price point.
- Earnest Money. Earnest money protects the seller if the buyer backs out. It’s typically around 1% of the sale price and is held in an escrow account until the deal is complete. If all goes smoothly, the earnest money is applied to the buyer’s down payment or closing costs.
- Home inspection. This is a crucial step in the home buying process. The findings that come from the inspection can help you negotiate price and repairs. Generally, you can expect to pay between $400 to $500 depending on the home size and the location.
- Appraisal fee. Before getting a loan, you will likely be required to get an appraisal of the home to determine its estimated value. This will be conducted by a third-party company and the cost can fall anywhere between $400 and $1,000, depending on the size of the home.
This real estate column is brought to you by Kylah Artz, a local real estate agent with Texas Urban Living, serving the DFW area.