Hidden Costs When Buying a House | Top 10 HIDDEN Fees When Purchasing a House
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Hidden Costs When Buying a House | Top 10 HIDDEN Fees When Purchasing a House


When you’re buying a house, you have the
sales price, that’s the amount that you’re paying for the property, but if you think
that’s the only thing you’re spending money on, I’ve got some bad news of ryou. Fees, points, credits, escrow, title, there
can be so many extra and hidden fees that you go in thinking one number, and you end
up paying a lot more so because of that, in this video I’m going to go through the top
10 HIDDEN costs that people don’t tell you about, or maybe they do, but they’re not
as well known as just the sales price. Now this won’t be about hidden fees once
you buy the house and start living in it, more of hidden fees when it comes to acquiring
the property. So with that being said, let’s look at the
top 10 hidden fees of purchasing a house. Fee number 1 is the home inspection. Wait, you already know about the home inspection,
so why am I including it on the list. Well what you might not know is that you pay
for the home inspection immediately, as opposed to at closing, and the home inspection could
cost up to $800 depending on the size of the house. It’s important to use a reputable company
and inspector. Some real estate agents will push you to use
their inspector that they have a relationship with already. Be aware of this. You don’t want to wear your tin foil hat
thinking everyone is conspiring against you to cover up items on the home inspection. But at the same time, you probably don’t
want your real estate agent to be best friends with your home inspector, that doesn’t look
good either. The company that I use is US Inspect. This is not an advertisement for them nor
was I paid to say this, I just have used them in the past and they have been very through. Fee number two is the appraisal. A common theme that you’ll notice here is
that once you go under contract, you’re going to have to start paying money. Some of the items we’ll discuss are fees
at closing, but the appraisal fee is one that is due upfront. The lender usually requires this to be an
upfront payment because even if the loan does not move forward, the appraiser still needs
to be compensated. Expect an appraisal to be approximately $400
– $500. Fee number three is the Earnest Money Deposit. Now wait, this one is not so much a fee, as
it is money that is due upfront that some may not know about. When you submit your offer, in its simplest
form, you’re just sending over a piece of paper to the other side saying that you’ll
do something. Well, the sellers need more commitment than
that. You got to have some skin in the game. In Virginia, D.C., and literally everywhere
else that I’ve heard of, you need to submit your Earnest Money Deposit, commonly referred
to as your EMD with your contract. This is an amount, usually 1.5% to 3% of the
sales price that is put into escrow and is a good faith deposit that you will go through
with the contract. The higher your deposit, the stronger your
offer. The EMD will end up going towards your closing
costs, but it is due upfront when you submit your offer so be sure you and your agent have
a game plan and are ready for the EMD at the time your offer is written. Fee number four is title insurance. Ahh title insurance, everyone’s least favorite
real estate topic. The long and the short of it is this: You
probably don’t need it. Just like you probably don’t need health
insurance for 6 months, you could probably skip on dental insurance for a year. You probably don’t need car insurance for
a year. That last one might be a crime now actually,
so don’t quote me on that. But if you’re buying property for $400,000,
$200,000, or however much money, you need to do what you can to protect your investment
to make sure that no other parties could legally take that property away from you. Because if someone has a lien on that property
and you don’t have title insurance that found that out, you might be in some trouble. Title insurance is going to cost about at
least $1,000 for lender’s title insurance, and then another $1,000 for owner’s title
insurance, this is paid at closing. I’m always going to buy title insurance
with properties I purchase just to be on the safe side and I will probably not be happy
about paying those fees for it. Fee number five is the county transfer tax. Whenever you buy or sell property in a jurisdiction,
that jurisdiction is going to take their cut of the pie. Now it may only be small cut of the pie, maybe
just the crumbs, but hey, that’s your hard-earned money so every little bit matters. It’s going to vary by jurisdiction, but
a recent $400,000 property my buyers purchased had a County Transfer Tax of $350 and a County
Mortgage tax of $300 totaling about $650 in fees. Fee number six, I’m going to sound like
a broken record but it’s now time for the State Transfer tax. States going to get their money too and it’s
going to be a little bit higher. Obviously the state transfer tax will differ
by state, but here in Virginia using the same $400k property, the state transfer tax came
out to $987.50, which is 25 cents for every $100 worth of property. Or to make it easier, .0025 of the sales price. Let’s also not forget about the State Mortgage
tax, which is about the same percentage before, that .0025 of the mortgage not the sales price,
so of the mortgage. So on tat $400k property, we have $987.50
in state transfer and $969.75 in State Mortgage totaling $1,957.25. That’s almost $2,000 in fees right there. Some states do not have a state mortgage tax
so be sure to check in with your local lender to see if these numbers will apply to you. Fee number seven is property tax. Lots of taxes here. These are paid at closing and are usually
pro-rated for half the year because around here most jurisdictions require you to pay
property taxes bi-annually. You can easily look up your city or county’s
property tax by going on your jurisdiction’s property tax website. One thing to know is that property taxes are
based on the value of the home. So if the sales price you buy your house is
more than what it was last sold for, which is usually the case, your property taxes will
be going up in the future. Fee number eight is your homeowner’s insurance
premium. The average homeowner’s insurance premium
is about $1,000. Unless you’ve done something differently,
you can expect to pay this at settlement. Remember, all jurisdictions could be different
so be sure you’re in touch with your lender and settlement company to see which items
are billed at settlement. Fee number nine is your HOA transfer fee. If you a purchasing in an HOA, a fee may be
due at settlement. And that fee could be up to $300. What does it go towards? Setting up your account, putting you in the
system, and that’s about it. If you’re like an HOA president or treasurer
or something you might get mad at me for this part but it’s basically a couple hundred
bucks that you’re going to pay and not really get anything back of value. It is what it is. Fee number 10 is title services. These are things like the settlement fee,
the title abstract, the title insurance binder, and the title closing protection agency. And you can look up all these title fees on
your own. That’s not the point of listing them out. The point of listing them out is that this
is an additional $550 on top of all
the other fees that we’ve covered. And maybe you’ve come across companies or
maybe you’ve thought to yourself that you’ll negotiate with the title companies and get
them to waive their fees but that’s how they make money. There’s one title company in my area. I think they charge a flat rate of $250 to
close. And you need to ask yourself. Do you really want to get the cheapest real
estate attorney out there? You’re buying a home. Do you really want to try to save $50 or $100
to get the least expensive company. Title companies have their fees. Some are higher than others. Try to get a few good recommendations before
choosing a title company. Most of the settlements I do now are split
settlements where the buyers have their title company and the sellers have. Be sure to do your research because like most
things, even real estate attorneys, you get what you pay for. And bonus, we have a bonus hidden fee. The 11th hidden fee when buying a house is
for condos and that is your condo move-in fee. I will put in another disclaimer that this
will vary by condo and by association. But many condos include the move-in fee at
closing. This is going to be anywhere from $100 to
in some cases $700 to move-in. If you’re purchasing a condo, your
move-in fee, if you have one, is probably going to be anywhere
from $100 – $300. There you have it, the 10, or make that 11
hidden fees to buying
a house. If you found this video helpful, be sure to
hit that thumbs up button and subscribe if you haven’t already for weekly real estate
videos. Thank you very much for watching, until next
time, create a productive day. Take care.

100 Comments

  • Bob Frazier

    Title Insurance, especially on modern track homes in these modern times is the one ripoff (price to value wise) that I dislike the most, especially in that they have deductibles on things like mechanic's leans etc. Most of your "hidden fees" can be avoided by paying cash and/or owner financing. Sounds like we have a few less fees out west, too – and our HOA transfer fee is free where I just bought/sold. ALL of these fees PALE IN COMPARISON to the 6% Realtor/MLS fees.

  • Comedian MsAnita

    seems like your SCREAMING one min. then the volume goes down. I turn it up & UR SCREAMING AGAIN. Very informative, but hard sound check your sound. thanks

  • Susi Kuczka

    We already paid for the appraisal, but when exactly will someone come out to walk around the house? What happens after they do the appraisal?

  • Grappler Baki

    Holy shit! I came here to learn something about buying my first home. After this video, fuck that!! I am doing just fine financially renting my apartment.

  • Atarien6

    And this is why as a first time homeowner you take the 0% down option. Cause there's so much bullshit you have to pay for that you don't have anything left for a downpayment

  • Suzannah-Zan Landingham

    Thanks for sharing information. You are a great presenter.
    It would be helpful to have steady visual representation of accumulated fees.
    Keep up the educational work 🙂

  • Jose Soto

    Im a realtor in Texas and neither the inspection nor appraisal are due upfront. Inspections usually $300-350 dollars. Not everything he is saying will apply everywhere in the US. Earnest money usually $500-1000 bucks, so chill out on that too. I also tell them about all these fees before hand, soooo not really hidden but ok. Good for those that didn’t know any of this though 👍🏼

  • Time Killer

    damn….im about to buy my first home through an FHA 30 year fixed rate (that i plan to pay off in 8-10 years) and I only have about 13,000. I didnt add up all these fees (and dont know which apply or dont apply in Indiana) but i'm starting to doubt that I'll have much left for my down payment. Might have to keep renting for another year…..

  • Guy Ashdown

    The taxes are the worst. They get in and get out with alot. Un preventable! The closing cost are something your realtor can work in the deal but it may hurt your chances on getting the offer accepted. Usually if trying to wrap that in the owner has to come down a little to match what the appraisal is. Sometimes the owner tries to include things like spare rooms, awnings , sentimental value, profits if any, etc that can't be included in the appraisal. Rules and codes set a standards on what can be included. That's what you get a true appraisal for. Now the inspection in some states can be done by the buyer. But? You really have to know what your doing and wht to look for. It's your money and you don't want to be taken by surprise. An inspector can find stuff that needs to be fixed and the owner can choose to fix it in order to be accepted by certain loans… the appraiser looks at that to get a true value also.. If there are needed repairs and the owner won't fix it certain loans won't approve it and the house and can be deemed cash only, as is, certain loans approved only. Fha or usda won't touch it. If you inspect it and something comes up your stuck with an overpriced house and your loan Co or insurance won't cover it. It's pre-existing! The inspector can effect the price and it's in writting and documented. Banks will only loan what its worth in their eyes. On some loans you pay a % of the loan to show your interest or stake. Some loans cover some downs and costs but you pay later. So your offer looks soft. Then the cash offers and direct/conventional loans could just step in because most have money to counter to make up the difference. Example the owner wants 200,000 but it appraises at 180,000. The owner says no way I want 200,000. The investor or someone who has money will make the difference. They may want to flip it knowing other houses sold for 220,000 or 230. They can make 30,000 on a quick flip ,a little lipstick and bandaids and bam quick profit and they push you out. It's a shark tank. Best bet is to save up, have a larger down to offset costs and cover all closing so the owner doesn't have to sacrifice in their eyes, pay off your bills to have more disposable income to get approval for higher amounts, and the buying process will go better. Ernest money down is a good thing to have. An average of 1000 to 1500. But more is better. Just don't make a hard ernest. Your realtor can explain it. If the owner is requesting a hard offer and ernest be warned. Something may be wrong.! Dont foget mortage insurance. It can go the life of your loan and is very hard to get dropped. (Example) You pay 900 and month on a mortage, but figure taxes, mortgage insurance you pay 1400 a month. Then save up for your yearly prop tax. About 1100 bucks a year. It can be a big surprise on top of all the others you just delt with. Stay away from the H.O.A. if possible. You may as well be in a trailer park. It works for some but it's only going to go up and you get very little in return. a constant drain on funds! Also! Remember the realtor needs to be paid to. Not by you in general but the money comes from somewhere… the less the owner pays out in the end will make them more likely to take your offer! 1st.. Be patient and don't just jump on the first house. It's not the house you buy, it's the neighborhood. People may jump ship due to crime, the market, whatever and it can make values go down. Talk to neighbors, drive around, make sure the area is solid. Are there alot of houses for sale? Why? Is the market good? Bad and the hurry to get out and go to newer areas? Are they flips? Do your homework! Hope this helps. Not all the facts but some you will see. Good luck buyers!

  • vidz06

    Question do this list make up closing cost or is this in addition to closing cost. And if it is when you request a buyers incentive toward closing it most if not all this list right?

  • Devon Wayne

    So basically you want about $10,000 to $20,000 to have to buy your first home, in up-front costs. Let me ask you, what if I were to wholesale a few houses, get a couples $4-20k kick backs (San Diego, CA) and then buy pre-foreclosure or tax deliquent house… Repair/flip it myself while living in it (1st home, remember) THEN resale for a final profit 1-3 years later.

  • onepink twoblue

    The financing company we talked to said the home inspection cost was built into the loan and they have a particular company that they use, which is required if we got a loan from them.

  • Vital Forces

    Matt, I love your videos but I've watched 100 real estate videos and this is the only one which mentions title insurance. Isn't there going to be a title search? If you're getting a mortgage, isn't the bank going to be certain there isn't a lien on the property before they loan you anything?

  • Matt Leighton

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  • Bernice Goldham

    intro is super abrupt and loud. great info (seriously helping me out as a potential buyer) but dang ya scared the bujesus out of me.

  • Joey

    Earnest money, check with your state what is the max amount in small claims and never give more. In ohio any amount under $2999 can be done in small claims without lawyers. Anything over…. well you better bring a lawyer.

  • Raul Zaragoza

    Do not be freaked out by all these fees since these HIGHLY HIGHLY HIGHLY vary by state and type of property, in amount and applicability. Go to your lender and get a loan estimate–it is FREE.

  • rouge3031ify

    Damn it. I already feel ripped off on how inflated the price is for a new house but with the hidden fees included.

    It makes me just want to run amok and shake the seller to death.

  • Kasie Joyner

    Arent these what realtors and lenders refer to as "closing costs"? I've always heard (I'm from Oklahoma) that closing costs are between 5K-6K

  • Tom Blake

    Wow, this turns me off from EVER buying. I'd be looking to have the seller eat most of these fees except for all the tax related ones obviously. Inspection and appraisal? Logic would tell you that the person selling you the house should have to prove what if anything is wrong with the house, and whether the house is worth what they are asking. As far as earnest money goes I am either not going to pay any or will expect it back if the deal falls though. Like I've said before I need to wait until it goes back to being a buyer's market because sellers will be more willing to eat a lot of these fees.

  • Amanda Paulino

    You just save me and my husband from doing a huge mistake in our lives … thank you so much for educate us. We definitely arent ready to buy

  • wrxdrifter19

    Great video! Question. If you're looking to buy a house that has fallen out of escrow with a prior buyer and they already went through a Home Inspection and Appraisal, are you required to do that all over again for your contract with the seller? I'm just curious if the Lender will allow you to use the information gathered from the previous attempt at selling the house.

  • Marsha Pierre

    I feel like everyone is basically taking a bite out of the money pie. Somethings are necessary yes but some is just like invented. Skin in the game shoot going broke in the game.

  • Marsha Pierre

    And the grand total = you are broke. Basically you pay all this money to so call own the property. But if you can't keep up with your mortgage for some reason or keep up the property according to what is required by the town you live in the home can still be taken away. In rental it is called eviction but in house buying it is called foreclosure. Do you really out right own anything?

  • Mark Magtoto

    What if the house is built from the ground are those hidden fees will be charge from you once they completed the house btw iam from las vegas

  • Dave B

    Discouraging buying in VA. 🙂 FYI, I shopped for my homeowner's insurance. 2,400 sq ft new home in CA for $500 annual. Shop this fee. Don't let realtor plug in this #!

  • ArcticAstrophysics

    First thing to look at when buying a new house, if it has a HOA or not and if it does keep looking! I'm sure some HOA's are good but a lot of them are horrible. You practically don't even own your own house if you live in one that has a HOA

  • Kayla Miller

    HOA- “You’re not going to like the value you get back from it……. because there is none.” I actually laugh-snorted on that. You’re too right. Thanks for the content!

  • Aileen Jacques

    Listen to what he says! My life has been ruined by a realtor selling me a piece of shit house passed by an inspector she recommended. Further FHA never inspected it just took that inspectors report. This place should never have passed for a loan. I'm so broke from fixing things I wasn't told about in a state NC I knew no one! I'm a retireee with nothing to show for working my whole adult life and can't get a job cause no one wants outsiders. I can't afford groceries at this point. I sold my house in NH and made a $45,000 profit. This place has sucked it all up just trying to fix what I could to sell and escape this hell. All cause of a corrupt realtor. Do your research! Never use a dual agent!

  • Em Es

    Thank you for a very informative video. Everything you said lined up nicely with what my lender said, so it was nice to confirm that what he was saying was ~correct. However, he did throw in a $300 "realtor paperwork" fee. Quick question: Do the title services include title search and are they searching for liens on the property or what? Thanks.

  • Em Es

    Thanks for the heads up about the title insurance – but – if the closing attorney is supposed to do a title examination – and if that is supposed to include: ..

    "an overview of what liens, judgments and mortgages, if any, exist that must be addressed prior to or at closing so it can secure a 1st lien position on the real estate." …

    then why does one even need title insurance? Just in case the attorney misses something? <– Then what am I paying him/her for?

    Is there ever an option to pay less for title insurance, say if the property is new or the owner has no living relatives?

  • Kyle Seagraves - Mortgage Advisor

    Great video!! Some of these fees can seem overwhelming, but they're super easy to get as one big quote from your mortgage advisor. Talk to a mortgage advisor and clue them in on your goals and they can prepare an estimate with everything in the video 🙂 Also, ALL lenders are required to show you this info at least 3 days after you have a contract on a house. Lenders are legally required to send you a Loan Estimate that details ALL costs and fees required on your closing.

  • GMU86

    If you have a good lender they will always ask what money are you putting down cash to close to cover closing costs and your down payment.

  • Lala Jee

    I did the same mistake. Went with real state agent's friend home inspector. I didn't do any homework bought a house which needed alot of work. And I paid for my mistake dearly.

  • Jesus Mendez

    Excellent information. In the process of purchasing a home. I wish I would have seen this video prior… All fees are factual!

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