Buyer Upfront Costs
These are costs you incur before you even officially own a home.
It is useful to know what out-of-pocket costs you can expect.
1. Contract Binder |
4. Pest Inspection |
1. Contract Binder
Required?: Yes, it is needed to "bind" the contract - to make it stick, so to speak.
What is it? This is the "deposit" or promise money you are putting down towards the house you are trying to purchase. This shows the seller how seriously committed you are towards the puchase contract. If you break the contract agreement without an acceptable reason outlined in the contract, you can possibly lose your binder to the seller. A knowledgeable real estate consultant will know how to properly structure your contract so that it prevents you from losing your binder unreasonably. A skilled consultant will structure "outs" in the contract that is reasonable to protect you, the buyer.
Cost: |
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Bare Minimum = $500 |
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2. Home Inspection
Required?: NoAlthough this is not a required costs, I would HIGHLY recommend this for EVERYONE.
What is it? You are paying an inspector to inspect your house inside and out. They will go on inside, outside, under, and on top of a house pointing out every major AND minor item they find wrong with the house. Think about it this way...if you are about to make one of the biggest purchase in your life in hundreds of thousands of dollars, why not spend $350-400 to find out exactly what you are getting? A caring and knowledgeable real estate consultant will advise you to get a home inspection.
Cost: |
$325-395 depending on the inspector |
3. Home Appraisal
Required?: Yes, by the lender. Unless you are paying cash for the property, you will need to get one.
What is it? It is a report produced by a real estate appraiser that gives an "appraised value" of a house. It tells you how much a house is worth. The lender uses this to make sure they are not lending you more than what the house is worth. They don't want to be upside-down in the house if they have to go into foreclosure. They are always thinking in terms of worst case scenario.
Cost: |
$325-400 depending on the inspector |
4. Pest Inspection
This is also called a "WDO" (Wood Destroying Organism) Report. Also known as the "termite inspection", it actually includes much more. It checks for any of living organisms that can destroy your wood. Examples are termite, mold, other pests, etc.
Cost: |
$75-95 depending on the inspector |
5. Other Inspections
Required?: Typically No. Sometimes when problems such as life left on a roof is indicated on the appraisal, the lender might required a roof inspector to state the yrs left on the roof. It really depends on the situation.
What is it?: Other specific inspections are typically done when recommended by the home inspector indicating further problems. Examples include A/C, plumbing, electric, roofer, pool, etc.
Cost: |
$75-125 depending on the inspector |