Every Expense to Know When Buying a Home

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Buying a home is the biggest financial investment most people make and involves more than the down payment, closing costs and mortgage.

So what exactly are the costs? When are you expected to pay for these items? 

We are exclusive buyer agents and brokers and specialize in the unique needs of home buyers. 

The List Of Costs When Buying a Home

1. Home Inspection Costs

I’ve recently seen ads and articles saying you don’t need a home inspection. This may be true if you are buying a new or almost new condominium with plans of purchasing a home warranty. But in most cases, you should have a home inspection. 

A home inspection is a crucial step in the home-buying process, providing insight into the condition of the property. Costs can vary based on location, home size, and inspector expertise, but typically range between $300 and $600.

Additional Inspections:

Radon Inspection: $150–$300

Pool Inspection: $150–$500

Well Inspection: $300–$500

Septic Inspection: $250–$500

Each of these inspections offer insight into a property so you can either plan for repairs or if your contract allows, void the transaction. 

2. Settlement Fees (Closing Costs)

Settlement fees, or closing costs, typically range from 2% to 5% of the home's purchase price. These costs include title searches, attorney fees (if applicable), and settlement services provided by the title company or escrow service. Common closing cost components include:

Title Search & Title Insurance: $500–$2,000

Recording Fees: $50–$300

Transfer Taxes: Varies by state and locality

Escrow Fees: $500–$2,000

Boundary Survey or Location Drawing: Varies according to the size of the property

3. Lender Fees

Mortgage lenders charge various fees related to the loan. These costs can include:

Origination Fees: 0.5%–1% of the loan amount

Appraisal Fee: $300–$600

Credit Report Fee: $25–$50

Underwriting & Processing Fees: $500–$1,500

Discount Points (Optional): 1% of the loan amount per point to reduce the interest rate

4. Lender Estimate of Costs

Lenders provide a Loan Estimate document that outlines the expected costs associated with obtaining a mortgage. This estimate includes:

Loan Origination Charges: Fees for processing the loan application

Services You Cannot Shop For: Appraisal, credit report, flood certification, and other required assessments

Services You Can Shop For: Title insurance, settlement services, and other optional third-party services

Prepaid Costs: Initial escrow payments for homeowners insurance, property taxes, and mortgage interest

Estimated Closing Costs: A summary of all lender, settlement and other fees (this is a line item document with estimates of all the costs)

This document helps buyers understand the financial commitment and allows them to compare loan offers effectively.

5. Buyer Brokerage Commission

Exclusive buyer’s agents and traditional buyer agents work on a commission basis, typically paid by the seller and/or the buyer as part of the transaction. Before touring properties, buyers and their agents will have signed agreements that include a start and end date, how the agent can or will be payed, any additional fees and terms to end the agreement. 

6. Additional Costs to Consider

Beyond inspections and settlement fees, buyers should budget for other costs, such as:

Homeowners Insurance: $800–$2,500 annually (included in the estimated closing cost sheet)

Property Taxes: Varies based on location (included in the estimated closing cost sheet)

HOA Fees: $100–$500 per month if applicable (included in the estimated closing cost sheet)

Moving Costs: $500–$3,000 depending on distance and services needed

Buying a home involves multiple expenses beyond the purchase price. Preparing for inspections, lender fees, settlement costs, and potential buyer brokerage commissions will ensure a smooth and informed home-buying process.

Consulting with a knowledgeable real estate professional, such as an exclusive buyer’s agent, can help you navigate these costs and make the best financial decision.

An important last note

Who works for you, the home buyer? 

Have your friends recently purchased homes? Did they have a good experience with their buyer agent? If so, interview their recommended real estate agent or broker. If you live in an area where there are exclusive buyer agents, schedule an interview.

Exclusive buyer agents and brokers are unique real estate professionals. They understand the serious conflict of interests that can arise in real estate transactions and choose to avoid them. 

What conflicts of interest you may ask?

The short lesson is this; you, the home buyer, have an agent or broker who represents you. The seller has a listing agent or broker who represents them.

Easy plan right? Well, not exactly. Most real estate brokerages “represent” buyers and sellers.  Why the quotation marks? Because traditional real estate brokerages have clients sign dual agency agreements. Once signed, the real estate brokerage can “represent” you and the seller in a single transaction. 

Exclusive buyer agents see this as a conflict of interest. Would a lawyer represent the plaintiff and defendant in a court case? Of course not, it’s illegal. But this type of  “representation” happens every day in real estate. 

In some states, this egregious form of representation isn’t allowed but there is a work around. The clients sign dual agency agreements where the seller has one agent and the buyer has one agent-both agents working for the same brokerage. 

This allows the brokerage to control both sides of the transaction. The commissions paid to the agents stays within the brokerage. 

Interview Questions for Buyer and Exclusive Buyer Agents

1. How do you get paid?
2. If I don’t think we are a fit, how do I break up with you and your brokerage?
3. Do you have additional fees in addition to your compensation?
4. Will you show me all listings/properties I want to see?
5. How quickly do you respond to my texts, emails and phone calls?
6. Will you explain each step of the home buying process so there are no surprises? 

If you have questions we haven’t answered in this article, please send an email. We wish you success in your home buying journey! 

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How can we help?

The exclusive buyer agents at HomeBuyer Brokerage specialize in serving home buyers. Please reach out with questions at info@homebuyerbrokerage.com.