Published on February 6th, 2017
What are the hidden costs of buying a home?
Buying a property costs more than you might first think. The price doesn't just stop at the negotiating table, and there has been more than one first-home buyer caught out by an unexpected mortgage fee, inspection cost or legal invoice that put them deeper into the red than they would like.
Arm yourself with the following knowledge to ensure your property checklist isn't missing some integral parts of the budget.
Finding the property
Finding a property is easy enough – just head over to your local real estate office or go online. But ensuring that it's up to standard is a more difficult – and costly – task. Before you settle on buying a home, it is integral that you perform building, pest and land inspections; the last one is particularly important if you are buying a small farm. These inspections can cost a few hundred dollars each, so ask the vendor if they have already conducted these tests recently, and to provide you with the results if they are available.
Think of these inspections as paying a one-off insurance premium that confirms you won't need to spend thousands of dollars down the line in repairs due to an unknown issue. If you do discover minor issues, you may also have a bargaining chip at the negotiating table as well. As such, don't skip on these checks.
Lending and legal fees
Fail to include these factors into your cost analysis, and you put yourself in property peril.
The sale isn't just between you, the real estate agent and the vendor. Your bank, your conveyancer and a slew of other legal and financial professionals may also be involved. Conveyancers will expect a fee for their services, while lenders will often request a mortgage registration or loan establishment fee. After that, you have to deal with stamp duty and title transfers – the former likely being the most significant hidden cost you will encounter, often reaching into the tens of thousands of dollars.
Fail to include these factors into your cost analysis, and you put yourself in property peril. Always consult with your property-buying team and ensure you know whether they charge a commission (as real estate agents tend to do) or a flat fee (as conveyancers are more likely to have). A good property professional will lay this all out in front of you from the very start, but ensure that you double check any fees that you don't recognise or don't understand.
Getting connected and council rates
If you spot the funding pot running low, be warned. The fees could soon be going up.
Finally, after you have actually moved into the home, you'll still need to sort out the water rates as well as power and gas connection. Sometimes this will already have been done for you by the previous owner, but if you want hot showers and a stove that works, it pays to double check.
If you are moving into a community or strata title scheme, you will also want to ask about the body corporate fees. Ask for a recent update from the vendor – if you spot the funding pot running low, be warned. The fees could soon be going up; an unwelcome surprise for a new home owner by anyone's measure.
If you're interested in learning more about the home-buying process, get in touch with your local real estate agent today to find out more about these hidden costs.