Upfront Costs in Purchasing a Home

Money, money, money! When you first start the home buying process, a big concern can be the money and cashflow that you’ll need to pay upfront once you have an accepted contract. Payments can start adding up, so I always try to make sure that my buyers are aware of what checks they’ll be cutting from the beginning once their contract is accepted.

While closing costs are a big concern to buyers, those don’t really come to fruition until closing day (end of the deal). When it comes to upfront costs, you’re top costs will include your Option Period Fee, Earnest Money and paying for your Inspection. I’ve pulled the ranges and explanations for each below.

UPFRONT COSTS IN PURCHASING A HOME

Termination Option Fee: Typically ~$100

Your Termination Option OR Option Period is typically a time frame of 7-10 days where you complete your inspections, come in and get quotes/estimates on any repairs you’re needing and ensure that you’re ready to move forward on purchasing the home. This period starts the next day after the contract is executed.

The Termination Option Fee protects your Earnest Money so that if you back out of the contract within your 7 to 10 day period due to the seller not agreeing to repair certain items or the home not being quite up to par, you would get your Earnest Money back. After the 7 to 10 day Termination Option Period, your property will go UNDER CONTRACT.

This fee is written out the seller of the home as they’re giving you this time frame to complete any inspections, etc. You do not have to complete an inspection or have a Termination Option Period, but it is always recommended.  Your Termination Option Fee CAN BE credited to your closing and negotiated on price point and day period.

Earnest Money: 1% of home purchase price

Typically, your Earnest Money is 1% of the overall price of the home. For example, if you purchase a home for $200,000 then your Earnest Money check will be $2,000. That is 1% of the purchase price. Is the 1% fee negotiable? Yes! But the Earnest Money is seen as good faith that you’re ready to rock and roll as a buyer so most buyers and sellers stick to using the traditional 1% number. If you’re in a bidding war, you may put down more in Earnest Money. It all depends on the buyer and the seller.

This fee is written out to the title company that is handling this transaction. Your Earnest Money IS credited at closing to your costs and can be negotiated.

Inspection Fee:  Truly varies on square footage of home/company – ~$360-$600

Is this a required fee? Not necessarily, but some lenders do require an inspection and I ALWAYS recommend my buyers order one so that they know the ins and outs of the home from a licensed professional. The fee ranges by the company you use and the square footage of the home. The bigger the home, the higher the cost. In my opinion, this cost is WORTH IT! 

This fee is paid directly to the inspector or inspection company. This IS NOT credited to your closing and if you back out of the contract you will not receive a refund for the fee. Inspections are there to give you piece of mind and know what’s going on from plumbing to foundation to electricity. It’s beneficial on ALL fronts!

 

While there are some other upfront costs in purchasing a home, these are the main costs after you receive and accepted offer on a property. These are all fee to expect and later on pull money for your downpayment, lender (appraisal, etc.) and closing costs. This is used to help guide you at the very beginning stages after a contract is accepted.

Preparing Your Home During The Stormy Season

April showers were supposed to bring May flowers, right? But all we feel like we’re getting are scary tornado watch calls from Mark Scirto from our local news station.

WINDOWLESS INTERIOR

In the grand scheme of things, you truly need to worry about finding a small, windowless interior room in the home. Duh! But we also need to think about how you can protect your home during this stormy weather from hail damage and more. Here are a couple of things you can do to protect and prep your home.

Untitled Design

HERE’S WHAT YOU CAN DO

Trim those trees. Look at the limbs close to your roof, where you park your vehicle or near any lines. While I always recommend hiring a professional, if it looks like a smaller job these tree trimmers can help lighten the load and stress. This can help prevent much larger issues after storms.

Cover or move your outdoor items. Do an inventory of your outdoor items like patio furniture, planters, firewood, grills, etc. Either cover those items or bring  them inside to a garage or shop area. You can use patio furniture covers, grill covers and more to protect your outdoor favorites. Securing them to the ground is also very helpful.

Check those gutters and downspouts. Ensure that they’re not logged with leaves or full of miscellaneous items by using gutter cleaners. Clear them out to prepare for proper flow of water during the storms.

Follow local news. Be informed. Pay attention to the weather either on your local weather radars, sign up for texts, calls or email alerts from your local weather station to be in the know on upcoming weather.

Inspect your roof. Hail storms and high winds are not your roof’s best friend. Keep an eye on the condition of your roof and if you see any significant damage, be sure to get in touch with your insurance adjustor to see what they can help cover repair costs.

Do you have an emergency kit? Grab the basics: first aid kit (bandaids, ointments, etc.), food (water and non-perishable snacks – put in those granola bars), flashlight with extra batteries, radio and fully charged phones or portable chargers. Have those ready just in case. 

Lastly…

FIND THAT SAFE ROOM! Be prepared and have a cleared and clean windowless, interior room or area identified for storms.  Stay safe!

Stay safe out there, my friends.

Home Buyers: Here’s Why I’m YOUR Expert!

Buying a home is one of the biggest and likely most $$EXPENSIVE$$ purchases you will make in your life. As a REALTOR®, I do NOT take that lightly and want to ensure that I can represent my clients in the best way possible by being knowledgable and experienced. To ensure that I can be YOUR home buying expert, I completed a designation course to become an Accredited Buyer’s Representative (ABR®). In order to become an ABR®, a REALTOR® must complete training that is specialized in understanding a home buyer’s perspective and promoting and protecting the buyer’s interest. 

While through experience and time as a REALTOR® you learn the ins and outs of representing a home buyer, this ABR® designation teaches you so much more. I joined a network of ABR® designees across the nation and we worked in groups on scenarios and how to better help our home buyers. I also took an additional course on New Home Construction to help assist my buyers that are looking to possibly build instead of buy and learned building process from beginning to end. I am here to help my buyers make informed decisions! 

So what can I do for you as an ABR®? I can assist you…

  • With needs and wants, and locate properties appropriate for buyer’s specifications
  • Help determine budget (pre-qualify)
  • Accompany in showing properties
  • Assisting in creating offer
  • Negotiation strategy for home buying
  • Vendor referrals (inspector, lenders, etc.)
  • Buying process from beginning to end in transaction – to closing and after!

All buyer’s representatives are NOT EQUAL! With my knowledge as an experience agent and as an agent that has earned the Accredited Buyer’s Representative designation, I have made the extra effort to raise the bar with additional training and education. I am confident that you’ll receive the HIGHEST level of buyer representation because I have taken the time to expand my knowledge in real estate and the home buying process.

If you’re  interested in buying a home, I would LOVE to help guide you in the process. Feel free to email me at bethanybreannenolan@gmail.com or call at (903) 738-8858.

Closing Costs: Here’s Your Breakdown

Home buying… it can be fun, it can be stressful and it can be overwhelming! There are so many steps and processes and costs involved in the process, and as a Realtor it is my job to have answers to all of my client’s questions and concerns. While I always get asked about negotiations, inspections and more, one of the main questions I receive from my buyers is…

“What will my closing costs look like…?”

Honestly, it’s important to have a nice breakdown to show where all of your money is going and possible costs that seem hidden to the first time home buyer. This is likely BIGGEST purchase a person will make during their life, so people need to know what it’s going to cost and where their money is going. It can get complicated on whether the buyer or seller is paying for certain portions of closing costs, but that’s where your handy-dandy Realtor swoops in to guide you in the negotiating process!

So first of all… what are closing costs? Closing costs are fees associated with the purchase of your property/home that are paid at the closing of your real estate transaction. A closing is when the title of the property purchased is transferred from the seller to the buyer. Closing costs are incurred by either the seller or the buyer, these CAN be negotiated.

Now that we understand the high level description of closings costs, let’s break it down. While there is a rather large list of items that can go into closings costs, what I’m going to do is break down the biggest costs first and dwindle it down to other associated costs.

CLOSING COSTS

Title Company Fees (Cost Ranges Follow the Descriptions)

  • Appraisal: Paid to appraisal company to ensure fair market value of purchased home. Cost: Ranges are ~$500. 
  • Flood Certification: Pulled by third-party, determines if property is located in a flood zone. Cost: Ranges close to $10-$15. 
  • Postage or Courier Fees: Cost for transfer of documents. Cost: Ranges close to $40.
  • Recording Fee: Recording of public land records. Cost: Typically around $130-$150.
  • Settlement Fees: The title company is paid for handling the closing. Cost: Ranges from $200-$300.
  • Survey: Goes to a survey company to verify property lines. This is not always necessary as some sellers already have a survey on file. Cost: Ranges around $650 for a normal lot.
  • Tax Services: This includes transfer taxes, property taxes that will either be prorated or handled at the closing table. Cost: Ranges close to $100. 
  • Title Search: The title company is paid for their search of the property’s records. They check on the deed of the home and ensure there are no liens, etc.

Lender Fees (These fees vary, so depend on lender for guidance with your situation)

  • Credit Report: Pulled by lender, grabs credit history for loan approval.
  • Homeowner’s Insurance: You’re typically paying your first year of insurance at closing. Simple as it sounds, it’s insurance and covers any potential damages to the home.
  • Origination Fee: Covers lender’s research and administrative costs. Typically 1 percent of loan.  
  • Owner’s Title Insurance Fees: Can be optional, but protects you in the event that there are challenges to the ownership of your home.
  • Underwriting and Processing Fee: Goes to lender and pulls history/researches buyer for loan approval.

A great estimate that I like to give my buyers on their potential closing costs would be to vary it from 2 to 4 percent of the overall purchase price of the property. So if you’re purchase a $200,000 home, you can think ~$8,000 on the very high end and ~$4,000 on the low end. I find it better to give my clients an estimate that near a number than nothing at all. It gives my buyers and sellers a little piece of mind.