A guide to understanding all of the fees and cost involved when buying or selling real estate in Texas.
The journey of buying or selling a home is often filled with excitement and anticipation. However, it’s crucial for both buyers and sellers to be fully aware of the various costs and fees associated with these transactions. Understanding these expenses is key to making informed decisions and planning your finances effectively. So let’s break down the various costs and fees that home buyers and sellers should anticipate.
Home Buyer
- Home Inspection and Appraisal: Before purchasing, you’ll need a home inspection (to check for any issues with the property) and an appraisal (to determine the home’s value). Inspection cost vary by the square footage of the home but range from $400-650. Appraisals will be order through the lender and cost roughly $500
- Down Payment: Typically 5 – 20% of the home’s purchase price, depending on the type of mortgage you choose. It can be as low as 3% or even 0% for a qualifying VA loan.
- Closing Costs: Buyers also face closing costs, which include loan origination fees, appraisal fees, title insurance, and more. These usually amount to 2-5% of the purchase price. There are ways to have some of these cost included into your mortgage to offset the amount you have to bring to closing.
- Property Taxes: You’ll need to account for prorated property taxes, which are often included in your monthly mortgage payment.
- Homeowners Insurance: This is typically required by lenders and varies based on location, home value, and coverage amount. In most coastal counties flood and windstorm insurance will also be required.
- Private Mortgage Insurance (PMI): If your down payment is less than 20%, you may be required to pay PMI, which protects the lender in case you default on your loan.
- Home Warranty: While optional, a home warranty can provide peace of mind by covering certain repairs and replacements in your new home.
- Moving Costs: Just like sellers, buyers will also incur costs in moving into their new home.
- Maintenance and Utilities: As a homeowner, you’ll be responsible for all maintenance and utility costs, which can vary greatly depending on the property. Most cities charge $75-250 as a connection fee for utilities.
Home Seller
- Real Estate Agent Commissions: This is typically the largest expense for sellers, usually around 5-6% of the sale price. This fee is split between the buyer’s and seller’s agents.
- Home Repairs and Improvements: Before listing, you might need to invest in repairs or improvements to make your home more attractive to buyers. This could range from minor cosmetic fixes to significant repairs. This is something we would discuss on the initial listing appointment.
- Home Staging: Staging your home, which might involve renting furniture or hiring a professional stager, can help you sell faster and potentially for a higher price. Talk with a real estate professional before, at Nuvilla we will take care of this for you.
- Seller Concessions: In some cases, buyers might negotiate for the seller to cover part of their closing costs. This varies but can be up to 2-3% of the selling price.
- Closing Costs: Sellers typically pay several fees at closing, including title insurance, transfer taxes, and escrow fees, which can total 1-3% of the sale price.
- Capital Gains Tax: If your home has significantly appreciated in value, you might be subject to capital gains tax. This will depend on how long you have owned or lived at the property.
- Moving Costs: Don’t forget the cost of moving to your new home, which can vary widely depending on distance and the amount of belongings you have.
Whether you’re buying or selling, it’s important to budget for these expenses early in the process. Sellers should factor in the costs that will be deducted from their sale proceeds, while buyers need to ensure they have enough funds in addition to their down payment to cover various upfront costs. By being well-informed and prepared, you can navigate the real estate process with confidence and ease. Feel free to contact us with any questions you may have about the cost of buying or selling real estate.
