Know your costs: Expenses Incurred When Buying or Selling a Home

Nothing is ever as black and white as it seems. We can see this first-hand when buying or selling a house. How easy would it be to put a price on the outside, have a buyer pay that price, and let you be on your way? Of course, we all know that there is more that goes into it than that.

Sure, most home sellers will factor in a real estate agent’s commission when evaluating their homes worth. However, there are many more underlying costs that are not factored into the equation. Buyers and sellers may set out with a specific budget only to find out that the costs of moving go way beyond what they had anticipated. Before listing your house, or going on the hunt, do not forget to include these future expenses into what you hope to get.

Added home selling expenses

Staging Costs

The first home selling cost will be the staging or preparing of the home to sell. Staging includes any maintenance work, landscaping, or tidying up around the house.

Big ticket maintenance work that would need to be addressed includes:

Roof and window
Structural issues

Cosmetic area expenses include kitchen, bathroom, flooring, and appliances such as smoke detectors and carbon monoxide. Of course, the outside must be well maintained as well to provide a strong first impression. The first impression of your house is going to set the market and affect how buyers react to its value.

Pittsburgh Property Maintenance Services

Making sure that your home is up to date on standards, with an engaging outside look and improved interior features can be an initial selling cost that helps create a long-term reward.  Others fees can be standard in terms of closing and will not add the same type of value to your home.

Closing Expenses for Sellers

Transfer Taxes: Transfer taxes are from the exchange in which the house closing becomes an official legally binding deal. These taxes are paid to the local jurisdiction. The seller will be responsible for these fees.

Settlement Fees: Both the buyer and the seller will pay a share of the settlement fee to ensure the title transfer.

New Deed and Notary Fee: The seller will need to produce a new deed that is notarized. This is estimated to cost $150-$300.

Dye Test: The city of Pittsburgh requires dye testing and certification. Dye tests will be the responsibility of the seller.

Home Warranty Options

A home warranty is an optional cost that can provide coverage for a home while it is for sale. Warranties can protect you from electrical, HVAC, and plumbing issues that can potentially occur in the home selling process.

Sellers can feel safe knowing their home is protected from any significant damage while potential buyers can increase trust, knowing that their prospective home was under warranty and has been preserved.

Added home buying expenses

Appraisal Fee

An appraisal fee is what must be paid to have an appraiser evaluate a home and find an estimate price. Of course, the final cost of a home is what the seller is willing to let go of it for, as well as what the buyer agrees to pay. Still, buyers need appraisals for a variety of reasons.

  • Banks will look at the appraisal before giving out any loan. Therefore buyers will need an assessment and will begin negotiations based on the appraisal price
  • Appraisals will present unbiased information that the seller may not believe but will show in the market
  • Appraisals can compare your home to others in the area
  • The appraiser will present a report that each seller can read through and understand what goes into the price of a home.

The price of an appraisal fee can vary on the lender, location, and size of the house.

Credit Report Fee

Buying and selling a home can affect your credit. Buyers will need a credit report to receive a loan from the bank.

Ranges of Credit Scores are as follows:

500-579 = Bad credit score

580-619 = Poor credit score

620-679 = Fair credit score

680-739 = Average credit score

740 and higher = Great credit score

The cost of a credit report will typically run from $15-40.

Closing Paperwork Fees

Closings are the moment when a title transfers from a seller to a buyer. A buyer must apply and complete the processing paperwork to finalize a closing.

These fees will vary based on the house, and paperwork needed to close.

Tip: Ask your closing company if the application covers a credit report test.

Title Company Fees

To move a title, the title company will add their share of fees as well. In case there are any unforeseen liens or judgments against the property that a seller was not aware of, title insurance is needed.

Title endorsements cover more specific issues than typical title insurance and can be added if necessary. Endorsements will vary by location.

Settlement fees, Document Preparation, Recording fees, and Closing Protection are all added fees that require a title search and transfer. These fees will vary based on the title company chosen.

Inspection Fees

Some appraisal companies will have an option to add a home inspection as well. Either way, a buyer should get their home inspected to prevent any surprises that come after moving, as well as help a bank establish a loan.

Inspection and home fees may not necessarily be required, but are often strongly recommended. The one exception is the Pest Inspection. Some banks do require the buyer to get a pest inspection to make sure that there are not any wood-destroying insects at the property before they will lend you the money to buy. Other inspection fees can include:

Radon Inspection: Radon is a naturally occurring radioactive gas that can be built up in areas with poor ventilation. Passing a radon inspection is needed to add value to your home and ensure safe living. This fee will typically run $150-$250.

Well and Septic Inspection: More than one in five houses still rely on some well or septic system. Repairs to well and septic issues can be an expensive long term hassle, and any home with that relies on a septic system will need to be approved.

Survey Inspection: Determining land disputes, encroachment, and even property and borough lines can come via survey inspections. In Pittsburgh, this can determine differences in taxes, which could swing a lot of money.

Flood certification: Another valuable asset when living in Pittsburgh is flood certification. Depending on the location, passing this inspection can completely swing the value of a home.

Prepaid Costs

Prepaid costs include taxes, insurance, FHA/VA First Use Premium, PMI Escrow, and interest. These costs are set by the lender, state, borough, and municipality. Taxes and insurance are prepaid items that get prorated at the time of settlement. If a buyer is getting a mortgage and they are escrowing these taxes and insurance, the lender will collect prepaid costs at the closing to ensure that they have enough established in their escrow account to pay next year’s taxes and insurance. These costs can vary depending on whether it is a conventional loan, FHA loan, or a cash transaction.

Know Your Costs

When buying or selling a home too often tunnel vision occurs, and people get caught up in a specific budget or a specific price that they see without factoring in all of the underneath costs that lay hidden under the surface of the real estate experience.

It is essential to understand that there are more costs attached to selling a house than giving a realtor, and there are more costs to buying a house than paying the sticker price. Setting your budget appropriately to reflect the expenses incurred when buying or selling a home is going to make your experience stress-free.