WHO PAYS FOR WHAT WHEN BUYING A HOME?
When buying a home, there are a number of expenses that both the seller and the buyer will incur. The specific allocation of these expenses can vary depending on factors such as local customs, negotiations between the buyer and seller, and the terms agreed upon in the purchase contract. However, I can provide you with a general overview of the common practices regarding who typically pays for what in a home purchase transaction in the Austin, Texas area:
Buyer's expenses:
1. Purchase price: The buyer pays the agreed-upon purchase price for the property.
2. Down payment: The buyer provides the down payment, which is a percentage of the purchase price paid upfront.
3. Option fee: This is the fee paid by the buyer to take the property off the market and evaluate it. Option fees vary depending on the price point, how hot the market is and the market you’re in.
4. Closing costs: These costs include fees for loan origination, appraisal, title search, title insurance, attorney fees, and other expenses related to the closing process. In many cases, the buyer is responsible for paying these costs, although they can sometimes be negotiated with the seller.
5. Inspections: Any inspections done on the property are paid for by the buyer, unless otherwise agreed upon.
Seller's expenses:
1. Real estate agent commission: The seller typically pays the commission to both the listing agent (representing the seller) and the buyer's agent (representing the buyer).
2. Property taxes: The seller pays the property taxes up to the closing date, while the buyer assumes responsibility for taxes from the closing date onward and will be responsible for making payment to the appraisal district at the end of the year.
3. Homeowner's association (HOA) fees: If applicable, the seller may need to pay any outstanding HOA fees up to the closing date.
4. Existing liens or judgments: The seller is responsible for clearing any existing liens or judgments on the property before transferring ownership to the buyer.
5. Any negotiated credits or repairs: As part of the negotiation process, the seller may agree to provide credits or perform certain repairs on the property. The costs associated with these concessions would be borne by the seller.
6. Survey: Most of the time there will be a survey already available, but if there isn’t, and if it is a financed deal, one will need to be purchased as the lender will require one. Sellers will typically pick up this cost, as it’s up to them to show the exact boundaries of the property they are selling. However, in competitive situations, I’ve seen plenty of buyers pay for a needed survey.
It's important to note that these are general guidelines, and specific arrangements can be made between the buyer and seller. Local customs and market conditions can also influence the distribution of costs. If you have specific questions about any of these costs and how they work, feel free to reach out.