What costs are accrued when buying a house?

Question

Hypothetical, you pay 100k cash for a house from a realtor. What other costs are there? Do you have to pay taxes right away, pay the realtor anything from the pocket etc?

Answer 1

If you’re paying “cash” (it's not always wise to pay cash, the lenders can dig up potential problems you may in a thousand years never come up with on your own. Also some IRS benefits to loan acquisition vs. cash) get a title policy (NO EXCEPTIONS) usually paid by the seller.

Your cost: (cash closing) 1 - 1.5%
Recording, $25-35 dollars.
Prepaid one year hazard insurance $400-$1,000.
Proration of property tax (depends on the month and when taxes are due in your area $500.00
Closing agent $125 - $350.00
Home inspection $300.00
Condo/H.O.A. association fees?

Answer 2

Usually there are points you pay, varying from 1 point and up. Points are percentages. Title search fee, title insurance, home inspection fee, lawyer fees, bank application fees, house insurance for the first year up front. That varies greatly by where the house is located. Ball park figure for a 100K house is $350 per year up front on day of signing.

The seller usually pays the Realtor selling fees and that could be 6% of the agreed selling price. If you hire someone to find a house for you that might run a few percentages that you will pay out of pocket.
If you have at least 20% down towards the cost of the house you won't have to buy mortgage insurance. Mortgage insurance is just another way for the banking system to legally rob you. So have the 20% down.
The mortgage company will usually require that you have some money up front for the real estate taxes. The balance of those taxes will be incorporated into your monthly mortgage statement. And you will also have house insurance added to your monthly bill. 100K house will be roughly $850 per month depending on location.

Answer 3

Mortgageman is correct, but let me add a little more information.

(1) Taxes. The buyer has to pay taxes that begin to accrue on the date of purchase. In the U.S., if you itemize, these property taxes are deductible in full in the year in which paid.

(2) Interest. The buyer has to pay taxes on the mortgage/deed of trust loan, beginning on the date of purchase. Again, in the U.S., if you itemize, then the interest portion of your payments (but not the principal payments -- your 1099 will separate them) is deductible in the year in which paid.

(3) Commissions. The real estate commissions which are payable to the seller's and buyer's real estate agents (in the U.S. normally) are taken from the purchase price, so there is no additional cost for the buyer. That is, the price paid by the buyer is not supplemented.

(4) Title Insurance. Either the buyer or the seller (it is negotiable in the U.S.) may pay for insurance, called "title insurance", to make sure that the seller actually owns the real property which the buyer is acquiring. The cost of title insurance is not deductible in the U.S. for federal income tax purposes for a personal residence, but the cost is added to "basis" -- if paid separately by the buyer -- which will be recovered (i.e. deducted) when the buyer sells the house.

(5) Fire Insurance. Fire and other insurance (theft, flood, etc.), if the house is for personal use in the U.S., are non-deductable expenses which cannot be added to basis. Such costs have no tax benefit.

(6) Professional Fees. If the house is for personal use, the legal, accounting and other professional fees which are incurred by the buyer to acquire the house are not deductiable, but such costs (generally) are added to basis and recovered (i.e. deducted, like title insurance) when the house is sold.

(7) Other Closing Costs. Again, if the house is for personal use, other escrow and closing costs which are incurred by the buyer to acquire the house are not deductiable, but such costs (generally) are added to basis and recovered (i.e. deducted, like title insurance) when the house is sold.

The general rule in the U.S.: the buyer doesn't have to pay anything more for a house than the purchase price plus the buyer's share of closing costs, which are usually not more than 2% of the purchase price ($2,000 in your example). Once the buyer owns the house, the buyer has to pay the customary costs of ownership, such as property tax, insurance, principal and interest, repairs and maintenance, and similar costs.

Good luck.

Answer 4

There are tons of fees, in the form of closing costs, property taxes, prepaid insurance, realtor commission/broker fee, recording fee, title co. fee, etc. Sometimes the seller will pick up some of them though, if you had negotiated that. At least with a cash deal you won't have a mandatory appraisal, mortgage insurance, or hazard insurance. If you were financing there would be all kinds of bogus bank fees.

Answer 5

for each sale of a house in australia , the average amount that the real estate agent will have will be around 2% or on average $1000 au - $2000 au depending on the real estate agreement between you and your real estate agent.The answerer above is the most correct and there is no need for me to reiterate on his answer.

Answer 6

It can vary by county and state. Contact your local title company.