Money…You Will Need It: How Much and To Whom
Now we’re getting to the nitty gritty. Your lender will give you estimates in regards to your closing costs and down payment but there is some cash outlay between the date of your accepted offer and closing. Expect to budget for the following items:
- Due Diligence Fee. The Offer to Purchase and Contract includes a due diligence fee that entitles you to a “Due Diligence Period” to perform inspections, appraisal, find insurance, do a survey, get lending approval, etc. The typical due diligence fee will range from $300 to $2500 (depending on the price of the home and the presence of multiple offers) and applies to the purchase price of your home. It goes directly to the seller and is non-refundable. It is the price you pay to take the house off the market for that time period. If you determine from your inspections that you don’t want to complete your purchase of the home, you can for any reason terminate the contract with no other culpability other than losing your due diligence fee. Your Earnest Money Deposit would be refunded.
- Earnest Money. Once the due diligence period ends your earnest money is at risk. Earnest money also goes towards the purchase price of the home. While Earnest Money seems benign in light of the due diligence fee, it shows a buyer’s cash strength.
- Home Inspection. A home inspection that includes the WDIR or Wood Destroying Insect Report will average in cost between $500 and $800 depending upon the size of the house and scope of the inspection.
- Termite Inspection. A termite inspection is usually included in the price of your home inspection. If you get one independent of the home inspection they range in cost of $50 to $150.
- Survey. A survey will range anywhere from $300 to $700 depending upon the scope of the survey ordered.