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Are you considering embarking on the exciting journey of buying or selling a home in the Austin/Round Rock metro? One of my jobs as a trusted real estate advisor is to educate and help guide you through the intricate world of real estate transactions, shedding light on the various costs involved and helping you make informed decisions. In this blog post, we'll delve into the types of fees and costs associated with buying and selling properties, while also exploring the realm of down payment assistance programs that can potentially save you thousands of dollars in your home purchase.
Understanding the Costs: Buying vs. Selling
In real estate deals, it's essential to know the different costs involved in buying a home versus selling your current one. Let's break down these costs to ensure you're well-prepared for every step of the process.
Buying Costs
Down Payment: Your down payment is a significant upfront cost when buying a home. It's a percentage of the property's purchase price that you pay out of your own pocket. In general, a larger down payment can lead to a lower amount of total interest paid over the life of your mortgage loan.
Closing Costs: Closing costs encompass a variety of fees associated with finalizing the purchase of a property. These may include loan origination fees, appraisal fees, title insurance, attorney fees, and more. On average, closing costs can range from 2% to 5% of the home's purchase price.
Home Inspection Fees: Before finalizing the purchase, it's wise to conduct a
thorough home inspection to uncover any potential issues. While this is an optional cost, it's highly recommended to ensure you're making a sound investment.
Appraisal & Survey Costs: Lenders often require an appraisal to determine the property's market value. Similarly, a survey locating and detailing the property's boundaries, easements and encroachments, and improvements is a critical document required by most lenders. The cost of the appraisal and survey are typically paid by the buyer and can vary based on the property's size and complexity.
Earnest Money & the Option Period: Earnest Money is akin to a deposit that shows the seller just how serious you are about closing the deal. Earnest Money is held in escrow by the title agent until the closing date. The Option Period is an important part of contract negotiations and highly recommended for conducting inspections on the property. An option fee is a dollar amount you offer to the seller in exchange for them taking their house off the market while you perform these inspections. Both earnest money and the option fee are credited to you, the buyer, at the closing table.
The list goes on: Other costs that come with purchasing a home can include a Brokerage Fee for your Buyer Representation (generally, this is an "indirect cost" for buyers), Homeowners Insurance, Property Taxes, HOA Dues if your new neighborhood has a mandatory homeowners or property owners association, and finally, Moving Costs
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Selling Costs
Real Estate Agent Commission: As a seller, you'll likely enlist the services of a real estate agent to market and sell your property. This fee pays for services such as tracking the market, executing a marketing plan, and managing the contract-to-close process. The agent's commission is usually a percentage of the final sale price, is a negotiable fee, and can vary greatly depending on the services the brokerage provides.
Staging and Repairs: Preparing your home for sale might involve costs associated with staging, minor repairs, and cosmetic enhancements to both the interior and exterior of your home to make your property more appealing to potential buyers.
Closing Costs: Sellers are also responsible for certain closing costs, such as title insurance, property taxes, and attorney fees. These costs can vary, but sellers should anticipate around 1% to 3% of the sale price.
Purchase Incentives: Thanks to the increased mortgage interest rates, "purchase incentives" have made a come back. Even though we technically remain in a sellers market, the interest rate environment has slowed the volume of sales to the point where many sellers are sweetening the deal to attract buyers. This can be in the form of rate buydowns, commonly referred to as a "2/1 or 3/2/1" buydown, or paying a portion of the buyers closing costs. Often times a seller will net more at closing by paying a purchase incentive over just lowering the asking price. Your listing agent can walk you through the calculations to help you make the best decision for your situation.
The list goes on for Sellers, too: Other common costs you may (or will) encounter when selling a home can include Storage Costs (for all the things that no longer belong in your perfectly staged home), Inspection Costs (because knowing up front what the buyers inspector will find can save you time and money), Property Taxes, any outstanding HOA fees, and finally, Moving Costs.
Are you thinking of selling your house, and curious what it may sell for? Click the link below to request an eProperty Watch report for your address.
Down Payment Assistance Programs
Making homeownership affordable and attainable across the Austin and Round Rock metro, is a hot topic right now. Aspiring homeowners have the advantage of various down payment assistance programs designed to lessen the financial burden of purchasing a home. These programs are especially beneficial for first-time buyers and those with moderate incomes. Here are a few notable options:
Texas State Affordable Housing Corporation (TSAHC): TSAHC offers down payment assistance and fixed-rate mortgage loans for eligible homebuyers. This program aims to make homeownership more affordable and sustainable for individuals and families.
Travis County Housing Finance Corporation: This program provides down payment assistance and affordable mortgage financing to qualified buyers. It's a fantastic opportunity for those who dream of owning a home within Travis County.
USDA Loans: The United States Department of Agriculture (USDA) offers loans with Zero-down or low down payment options, and favorable interest rates for properties located in eligible rural areas. If the location of your desired home qualifies, this can be a game changer.
Seizing the Opportunity: Take the First Step
Now you are ready to embark on your real estate journey with confidence! Understanding and anticipating the costs involved in a sale or purchase is key to having a low-stress transaction. Whether you are buying or selling in Williamson County or Travis County, I'm here to guide you every step of the way.
Take the first step in your journey by requesting a consultation to talk about your specific goals, and to learn how I can help you navigate the complexities of today's real estate market. My motto is "Profit is my product," which means I'm all about maximizing your financial and quality-of-life results when you sell or buy real estate. Click the button below to contact me and let's turn your real estate aspirations into a remarkable reality!
My name is Diane Bilke, Texas REALTOR® brokered by Realty Texas.
I hunt "unicorns" for a living and will tell you what you need to hear, not just what you want to hear. 😁😇😁
Have License, Will Travel. Specializing in Georgetown, Round Rock, Leander, Lago Vista, and Cedar Park. Follow me on the socials @DianeBilke or @DianeBilkeREALTOR.
Call or Text to 817.291.5046. Email diane@realtytexas.com
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