THE COST OF BUYING A HOME
The “Spring or Pre-Spring Market” which is typically the most active time of year will be kicked off after the Super Bowl. Therefore, every day, new listings will be “springing” up, posting onto the MLS (Multiple Listing Service) and then populating to your favorite search engines. It’s also the time of year when new Buyers come out from the winter lull ready to get in contract before the next school year.
When I work with first time Buyers, I often noticed that while they seem well-informed searching the Internet for that perfect home, AND are surprisingly knowledgeable about the list-to-sales price of past properties, they’re often far less well-informed about the costs of buying a home; closing costs, or the ongoing costs of ownership; annual property taxes and maintenance.
Buyers pay the full cost of title and escrow insurance which your lender will require in order to ensure clean title on the property, meaning that all liens have been paid off and most importantly, that the Sellers are actually the owners of the property and have the authority to sell it. Itimp is therefore important to read that Preliminary Title Report in the Disclosure Packet!
At the closing of your house, title/escrow will collect pro-rated property taxes, the first year of homeowners’ insurance (also required by the lender), loan origination fees and other expenses such as notary and recording fees. Altogether, you may be looking at close to 3% of purchase price. On a $1 million house, your closing fees could be as much as $30,000 and this is not money the lender folds into the loan, so budget accordingly.
“Point-of-sale ordinances” are items like sidewalk inspections (required in Piedmont and Oakland but not Berkeley), energy conservation ordinances (required in Berkeley only, known as BESO), and sewer lateral certification (required by EBMUD). Sewer lateral replacements MUST be completed within 180 days of the transfer of ownership (unless already compliant) and average between $5,000 – $8,000. These costs are typically passed along to the Buyers when there are multiple offers.
What does the Seller pay? BOTH sides of the commission as well as getting the house ready for the market such as painting, and staging which can add $15,000 – $30,000 to their out-of-pocket expenses.
So yes, buying or selling a home can be expensive, daunting and a bit overwhelming, but it’s also the best way for average Americans to accumulate wealth over time. I’m here to help you navigate the process from beginning to end and I will let you know these costs in detail before you begin your search – not after – which is what you’d expect from your trusted Real Estate advisor.