When I first meet with clients, I talk through the entire buying process. We talk about the process from the initial consultation with me, as their real estate agent, to the closing table, and everything that happens in between.
A question that I get asked quite frequently is,
“Mary Courtney, how much money will we spend on things from now until closing that isn’t included in our down payment?”
There are a couple items that you, as a buyer, could be responsible for:
First: Earnest Money
When I sit down with clients to write an offer, they will usually put some earnest money down. It’s basically good faith money that says “we’ve got skin in the game”! I typically advise clients to put down around 1% of the purchase price, but whatever they are most comfortable with. This money is held in an escrow account until closing where it is released to the attorney and goes towards closing costs/down payment amount.
After the contract is ratified, there are 10 business days to do any and all inspections. The inspections that we encourage our clients to get are: a full Home Inspection, an HVAC Inspection, and a CL-100 (termite) inspection. The average cost for these three are between $470-$700 depending on the size of the house and how many HVAC units are in the home. Other inspections that my clients have had done are: a pool inspection, a well inspection, aa septic tank inspection, a sprinkler system inspection, and a chimney inspection. As you can see, you can have inspection done that you’d like! The inspectors ask to receive payment at the time of the inspection so they can release the reports to the agent and client. If you are obtaining FHA or VA financing, a clear CL-100 (termite) letter is required, though the seller will usually credit you for this inspection at closing.
After the contract is ratified, and if it is important to you to know where your property lines are located, then we suggest ordering a survey on your property. Some clients like to ask the attorney to pull the most recent survey on file to see if it suffices, but if it is very important to you, then I encourage clients to order one within the 10 business days due diligence period. Surveys can cost anywhere from $450 and up, dependent on the lot and location and how easy it would be to find the metal stakes/landmarks to draw the survey.
Fourth: Closing Costs
There are items that are required to purchase a home, that are not included in the down payment, called closing costs. They include but aren’t limited to: deed stamps, attorney fees, lender fees, etc. Depending how the buyer would like to structure the offer, they can always ask the seller to pay for the closing costs. It is hard to estimate a dollar amount up front because a lot depends on what type of financing the buyer is using. Typically, we can work with the lender up front to determine an estimated amount that you would need.