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Knowing the upfront costs associated with buying real estate will allow you to better understand how much money you will have to spend throughout the process. Here are four common costs that you will incur before the closing table:
EARNEST MONEY DEPOSIT
Many buyers are surprised to find that when making an offer on a home, an earnest money deposit is required to show commitment to the seller. These deposits are designed to protect the seller from frivolous offers. The good news is that the earnest money goes directly toward your down payment.
If you plan on obtaining a loan to buy your next home, you will definitely need an appraisal. Lenders use third party appraisals to assess the value of the property and to prevent the bank from lending more money than the home is worth. The home appraisal cost is typically around $400 and occurs once the home is under contract. Learn more about the appraisal process here.
A home inspection is preformed to asses the integrity of the property you are purchasing. Your home inspector will be looking for foundational issues such as plumbing, electrical, and roofing. It is important to note that home inspections are not designed to point out cosmetic flaws or to be used as an excuse to terminate your contract. The home inspection commonly occurs once the purchase agreement has been signed by both parties and will generally run you around $400. However, radon and mold inspections are frequently requested and typically have an additional fee associated with them. Learn more about home inspections here.
The report is called a wood destroying insect inspection report and it is usually performed around the same time as the home inspection. It’s the buyers responsibility to pay for the inspection, and it typically costs less than $100. In the event that treatment is required, the seller will cover those costs.
When caught off guard, these upfront costs can lead to an unhappy experience for homebuyers. Knowledge is power, so let us help educate you on the real estate process. If you have questions about any of the topics mentioned in this article, give us a call at (615) 933-1000 or email us at Info@LivingTN.com