Who pays for what when you’re buying or selling a house: buyer edition.
So if you’re buying a house, sometimes when you get excited you think about the process, and you’re really focused on looking at homes and that whole emotional aspect of it, you don’t necessarily think about all of the little things that come along the way, and who pays for them.
So when you’re buying a home, the first thing once you have found the house that you love, and you’re writing the offer, of the first things you’re going to do is you’re going to write a check to send a wire for the earnest money deposit. Now, that is basically a deposit that is going to be held in escrow. So it doesn’t go directly to the seller in the state of Virginia, in the state of Virginia, that is all I can talk about because that is where I am licensed. So in the state of Virginia, it does not go directly to the seller, it gets held by the settlement agent that you’re going to use to do your closing, or the real estate company that you are working with to buy your home, that generally needs to be about 1% of the entire purchase price of the home. So if your house is $500,000, you probably want to write about $5,000. As your earnest money deposit, it basically binds the contract again, it gets held in an escrow account until closing. So if you were originally going to have to bring $100,000 to closing, you will then only have to bring $95,000 Because that $5000 gets applied to whatever else you bring to closing for your downpayment, your closing costs.
Another thing you’re gonna have to pay for as the buyer is any inspections that you have. And we are now still in a crazy tight market, but we are seeing a good number of inspections. And they can range in price from $100 to $1,000, depending on the type of inspection. And what I always tell people is you can have as many inspections as you are willing to pay for. You have to weigh that out and discuss that with your agent, because you may know that you want to have a camera sewer inspection on one house, and on another house, it may not seem as important. So sometimes those numbers and those types of inspections depend on what you’re buying, and where and all that good stuff. So remember, the seller is not paying for any inspections except the pest, Wood Destroying Insect, inspection. That is the one that they’re paying for and it usually costs them $100 or less.
Once you’ve covered that earnest money deposit and your inspections, your next cost is going to be your appraisal. And if you’re going to have a survey. And your appraisal is generally going to be in the 600 to $1,000 range. And that survey, if you want to have one, a lot of lenders don’t require them anymore, but they vary widely depending on the property, the type of property, where it is, how difficult it is to survey, and 100 other things. So I can’t give you an estimate there. But those generally are going to be things that you’re going to have to pay for out of pocket, because should the loan not go through, those people still want to be paid. So they’re going to want the money upfront and not rolled into your closing costs that happen on closing day.
After you get through those financial hurdles, you’re not going to have to pay anything really until you get to the settlement table and then you’re going to have all of your lender fees, your attorney fees, your title insurance, your points that you might have with your mortgage, there are a whole bunch of things and I have another video that kind of breaks down the closing costs, so go check that out if you want a little bit more detailed info on what your closing costs entail. But at settlement, you’re going to get that earnest money deposit that you paid upfront applied to that number and then you’re going to have all of your closing costs and the actual amount that you’re paying for your down payment. And then you’re done. But those little along-the-way fees sometimes get lost and all the excitement so just make sure that you’ve budgeted and that you’ve got the cash, even if you’re putting a relatively low down payment, make sure you’ve got the cash to cover all those other things that you might want to do along the way or that you’re going to be required to do.
If you have any questions or you want a little bit more detailed information about what things might look like for you in your financial situation with the home that you want to purchase. Give me a call I’d love to chat and help you make your homeownership dreams come true.