The “Surprise” Costs of Buying a Home

UPDATED 9/6/2016. Buying a home in the Greater Austin Area is a tremendous time in your life and is one of the biggest decisions you will ever make. While this event comes with a lot of excitement, it also comes with some mystery and a lot of questions as well. Can I afford to buy right now? How much is it going to cost me? How much cash do I need up front to buy a home in Austin?

Personally, I hate surprises. That hate is motivating me to make sure you have this information. I do my very best to make sure that everyone I work with or potentially work with fully understands the home-buying process and how much it will cost them. The information below represents that most accurate and up-to-date information I know on how much you will likely spend to buy a home. If you have any questions about buying a home or how you can best be prepared to buy your next home, drop me a note or give me a call.

  • Option Money – $100 – Due 48 hrs after your offer has been accepted > paid to the seller and usually buys you 7-10 days of an “option period,” a period that begins when your offer has been accepted and gives a buyer the unrestricted right to cancel the contract for the specified time period. This amount is usually applied toward the money you must pay at closing.
  • Earnest Money – $$$ (usually 1% of sales price – i.e. $2500 for a $250,000 house) – Due when the contract has been accepted > paid in certified funds (cashiers check) to the title company and is a “deposit” on your purchase. If you chose to cancel your contract anytime after the option period, you usually will not get this money back. This amount is also applied to the money you must pay at closing.
  • Inspection Fee – $300-500 – Due before you receive your inspection report, usually performed during the option period > While an inspection is not required, I would advise any client to inspect any home they are purchasing. There a many potential issues with a home that are invisible to the naked eye and require a professional inspector.
  • Termite Inspection – $100 – Due before you receive your termite inspection report > A termite inspection is required any time you are using a VA Home Mortgage, but is not required for other loan programs. It can usually be bundled with a home inspection for a better deal and is also usually performed during the option period.
  • Survey – $425 – Usually due when your lender orders the survey > Often, a survey is provided by the seller and a new one is not required. If there have been changes since the last survey was made or if there is no survey is available, a new one will have to be ordered. Who pays for the new survey is something that is negotiated as part of the contract so try to get your agent to get the seller to pay if a new one is required.
  • Appraisal – $400-$500 – Usually due when you lender orders the appraisal once the option period is over > The lender will require an appraisal for any loan they fund. This is an item the buyer always pays for and is usually not ordered until after the option period is over to avoid having you pay for an appraisal if you cancel the contract during that period. The lender uses the appraisal to determine if the property is worth the price you are paying for it.

Other Possible Costs

  • Repairs – Amount varies depending on repairs > most often, repairs performed on the home before closing are paid for by the seller, but if a seller is unwilling to pay for a repair, they may agree to do the repair if the buyer pays for a portion of the work. In that case, you might have to help pay for this upfront.
  • Termite Treatments – Amount varies depending on treatment area > like basic repairs, you might have to help pay for this treatment if you want it performed prior to closing

Keep in mind, the costs above are the costs you should expect prior to closing. You will certainly have to have money for a down payment on probably closing costs as well. If you have questions about buying a home or how much you should be prepared to spend, drop me a note or give me a call at 512.636.9707.

By Kyle PfaffeREALTOR® e: Kyle@AustinHomes4You.com

m: 512-636-9707 w: AustinHomes4You.com

Common Mistakes of First-Time Homebuyers, Part 2 – Buying the Most Expensive Home You Qualify For

Part 2 – Buying the Most Expensive Home You Qualify For in the Great Austin Area

In Part 1 of this series on the common mistakes of first-time homebuyers, we discussed the pitfall of Taking Advice From Friend and Family on your real estate transaction. In Part 2, we will look at the danger of buying the most expensive home you qualify for in the Greater Austin area.

Becoming a homeowner in the Greater Austin area is very exciting for a first time buyer, but it can also be a costly experience. If you are not prepared for the additional costs of home ownership, it can become a huge financial burden and rob you of some of the joy and excitement of purchasing your first home. but it can become a financial burden, if you’re not prepared for the additional costs of home-ownership  While, as we learned in Part 1 of Common Mistakes of First-Time Homebuyers, getting advice from friends and family on your real estate transaction can be dangerous, this is an area where their first-hand experience on buying a home and handling the costs of maintaining it can be very helpful to you.

When buying your first home in the Greater Austin area, make sure you consider all of the expenses that you will incur. Some people will make the mistake of buying the most expensive home their lender says that they will qualify for and do not properly account for the additional costs they will have as part of owning a home. Be realistic about how you will have left over after your mortgage payment for the rest of your expenses. Your first home might be the home of your dreams, but if your mortgage payments are too much to have money left to enjoy the rest of life, you will feel prisoner in your own home. Consider buying a less expensive home that will allow you to live comfortably and even build equity more quickly that you can then use towards the purchase of a home when you decide to move up.

I hope that this information has been helpful as you consider buying a home. If you would like more information about buying or selling real estate in the Greater Austin area, please Contact Me today and I will be happy to help you however I can! Be sure to check back here for Part 3, Making Low Offers on Homes in the Greater Austin Area.

Kyle Pfaffe, REALTOR®      e: KylePfaffe@kw.com      m: 512-636-9707      w: AustinHomes4You.com

Common Mistakes When Buying a Home, Part 1 – Taking Advice from Friends and Family

These are five common mistakes made by all kinds of home buyers, but most frequently by first-time home buyers. Not all of these mistakes are huge, but they all can make your purchase much more difficult and stressful if you do not avoid them. This is part one of a five part series the the most common mistakes. If you have any questions about buying a home and your specific situation, contact me! In this first installment, we will talk about the danger of taking advice on your real estate purchase from friends and family. Friends and family can be a valuable resource in many situations, but there are two major reasons why taking advice from friends and family can be dangerous when buying a home.

First, a number of factors make every single real estate transaction unique and complex and should be handled by someone with knowledge and experience of a professional. The unique factors include the personalities, income, credit scores , debt ratios, savings and preferences of both the buyer and the seller. Throw in the complexities of real estate law, changing home prices and market conditions and a fluid lending climate and you can start to see why it might be important to have a professional on your side. Your local real estate agents and loan officers are working in the real estate field on a daily basis and have an in-depth knowledge and real-time experience in dealing with home values, appraisals, negotiations, lender requirements, inspections and much, much more. While your friends and family almost assuredly have good intentions, they do not have the knowledge and experience you need to make informed decisions and to protect you. Also, with the real estate market constantly changing, what was true when your friend or relative bought a home, or what was true a year ago or even yesterday, might not be true today. While it is prudent to get a second opinion in most situations, you should seek that advice from another industry professional who has all the details of your situation.

Second, taking advice from friends and family when buying a home should be avoided because they do not have the same perspective as you on your home purchase. While your friends and family will undoubtedly be entertained in your house and might even stay the night on a holiday, they will not be living in your home, YOU WILL! They will not have their name on the deed, be paying the mortgage, driving your daily commute to work or maintaining your home. I am sure that while your friends and family also have excellent taste and a impeccable sense of style, when their tastes and styles are imposed into your home search and buying decision, it will make things much more complicated and cloud your ability to know what is best for YOU! If you invite a friend or family member along with you to see homes with your real estate agent, you might get more than you bargained for – a third decision maker on which home you should or shouldn’t buy!

Friends and family care about you very deeply and only what the best for you! That being said, their desire to “help” can add stress and be a hindrance when buying a home, especially when buying your first home. I hope this advice will help you when buying your home – if I can help you, let me know! When part 2 is posted, check out another common mistake, Buying the Most Expensive Home You Can Afford!

Kyle Pfaffe, REALTOR®      e: KylePfaffe@kw.com      m: 512-636-9707      w: AustinHomes4You.com

Why Work with Kyle when Buying a Home?

When working with potential home buyers, I pride myself on providing excellent advice and expert negotiation to help you make the best decision for YOU.  During our search, we will focus on your needs and your wants to help you find the best place for YOU! My knowledge of foundation issues and the impact various soils can have on a home set me apart as someone who can help you avoid the pitfalls that can be prevalent in Central Texas. (full bio)

During the Home Search

  • Search all active homes on the market for properties that match your criteria
  • Get information and access to properties “to-be-listed” by any of the over 500 agents in my office that you would not otherwise get access to
  • View homes with you, offering advice and expertise gained from viewing hundreds of homes
  • Use a Pro-Level Manometer to measure the foundation level on any house we potentially could put an offer in on
  • Prepare a Comparable Market Analysis (CMA) to determine the real value of a home before you put an offer in

Going Under Contract

  • Negotiate with the listing agent to ensure you get the best value in regards to sales price, survey costs, title costs, home warranty costs, closing time frame and closing costs
  • Monitor and manage title processes, lending processes, appraisal processes, inspections, and land surveys
  • Negotiating repairs, managing HOA issues and taking the contract to close

I save you…

  • Time – We only look at the BEST properties so we don’t waste time on homes that don’t match your criteria!
  • Stress – I handle the transaction details and negotiations so you can just plan your move!
  • Money – My knowledge and ability in property valuations and negotiations ensure you get your home at a great value!

Kyle Pfaffe, REALTOR®      e: KylePfaffe@kw.com      m: 512-636-9707      w: AustinHomes4You.com