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Real Estate Fees That You Need To Know About


The euphoria of becoming a homeowner at a young age can be very intoxicating. The approval from your friends followed by the respect of your peers can really blind you. Usually, the shockingly high amount of fees creeps up on you when it’s too late or when you least expect it.

Since there are many fees that go along with real estate that many of us are unaware of, I wanted to take the time to examine these fees that arise by dividing them up into the three different stages of the home ownership process:

1. Pre-Home Ownership Fees:

Real estate agent. You need to hire someone to help you find that dream property. The real estate agent usually takes their chunk out when the sale of the property has been finalized. You need to be aware of the percentage that the agent will charge before you select one. The fee should not be the only consideration when choosing between agents, but it’s very important for your budget. Keep in mind that some states will require the seller to pay 100% of the fees, others will require the buyer to pay 100% of the fees, and yet others will be a combination of the two.

Down-payment. This is where the bulk of your savings will be spent (unless you try the whole “zero down” thing). Most “experts” on the topic suggest that you should put down 20-25% of a down-payment on your first property. A lot of this decision will depend on what down-payment your bank requires to make them feel comfortable with the loan they are providing you.

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2. Home Buying Fees:

Closing costs. Closings costs can include a whole slew of fees, including loan application, inspection, appraisal, and government fees. The list can really add up!

Lawyer fees. You’re going to have to pay your lawyer for representing you throughout this whole process. Just remember that the fees usually increase based on any additional work you ask your lawyer to perform. You can also expect to get charged for every minor aspect of the process that requires any work from your lawyer (from sending mail to time spent looking through documents). These fees can easily hit upwards of $1,000.

Moving costs. No matter how you plan the move, it will cost you money. If you choose to save money by not hiring a moving crew, you’re still going to have to rent some sort of a truck to move everything around. You also need to factor in the time spent on the move and any food/beverages you’re going to have to purchase for your buddies that help you move.

Taxes. You can never forget about paying your taxes!

3 Post-Home Ownership Fees:

Renovations. You will find many problems with your new property. Even if you buy a new home, you’ll still want to make modifications (turning the basement into a bar). You’ll inevitably want to take on home improvements that will increase value when you move in to your first place. It’s just our natural reaction to want to switch things up and customize our new home to our unique tastes.

Increase in consumption. Now that you have your own place, you’re going to spend more money. You can try to argue that you won’t spend more money, but let’s be realistic here. You’re going to want a new TV. You’re going to want a new carpet. You’re going to want nice furniture in all of your rooms. This is just the reality of the situation. You will definitely notice an increase in consumption when you move into your new property so please keep this home-ownership fee in mind. Also, if the house is bigger than where you previously lived, your monthly expenses will increase drastically as well.

There you have it, a comprehensive list of all of the fees associated with home ownership. Were you aware of these? Did any catch you by surprise? Did I miss any? Please do share. I’d love to hear from people who have been through the home-buying process or have some experience with it.

(Photo credit: brianholsclaw)

Martin is a 22 year old personal finance writer that attempts to make money talk fun. After taking many finance courses in college he realized that this stuff is completely boring and that nobody cares about complex calculations. He started his own personal finance blog in November of 2008 and has been passionate about making matters interesting ever since then. His goal is to show you how to get the most out of life, while still saving a buck or two.