Casanova Brooks
Casanova Brooks

Licensed Agent

The True Costs Behind Real Estate Transactions


Table of Contents

Imagine how simple it would be to purchase real estate. The property’s price tag is clear, allowing you to quickly calculate your budget and allocate your funds accordingly. You grab the opportunity and proceed with your real estate transaction.

Then you discover there are additional fees before you can truly ‘own’ the property. This may cause some trouble, right? 

Keep in mind that purchasing a real estate asset involves expenses beyond the down payment. In addition to the property’s purchase price, additional fees will be incurred at closing to transfer ownership legally. To ensure that the transaction is completed honorably and legally, both the buyer and the seller will be responsible for certain costs, such as taxes. 

This article by Chatburn has included a checklist of some of the costs that typically occur in this post. Below, look at a few of the real estate transaction costs.

Real Estate Transaction Expenses That Could Be Involved

The legal end of a real estate transaction is the transfer of ownership which involves signing official paperwork. This means that in addition to the purchase price, there are other fees that must be paid before the house or property may be claimed by the buyer.

What follows is a breakdown of the typical real estate transaction costs like those found on sites like chatburnliving.com:

1. Downpayment

First, let’s talk about the expenses that most first-time homeowners anticipate, like a down payment. The down payment on a conventional mortgage is typically between 5 and 20% of the home’s purchase price. However, this cost is often established by the mortgage lender.

2. Purchase Price

This is the single most noticeable expense connected to buying property. As a first point, there are financial expenses incurred during the buying process. Commissions paid to brokers mortgage loan processing fees paid to the bank, and government fees for changing ownership of a property all count as transaction costs. First-time purchasers frequently need to account for such costs. However, they can easily exceed 5% of the initial purchase price.

real estate transaction costs

3. Broker’s Commission Fee 

It’s the agreed-upon percentage of the property’s total selling price that the seller pays to the real estate agent or broker as a commission. On average, these costs amount to about 3–5%.

4. Property Taxes 

It comes as a shock to many new homeowners to learn that they must pay property taxes before closing. Typically, the buyer will reimburse the seller for the taxes the seller has already paid.

The fair market value of your home determines your property tax liability. In most cases, a tax preparation firm will double-check that the appropriate taxes have been paid. Usually, the cost is $75.

5. Interests 

In today’s market, mortgages and other forms of debt financing are commonplace when purchasing a property. In today’s society, a mortgage is practically expected. It’s extremely unusual for people to put down 100% cash when purchasing a home today.

But if you have a mortgage, you have to pay it back, and your mortgage payments will always include interest. 

The lender charges a fee for extending credit. Your loan’s principal and interest will be spread out over the length of the loan to make sure you pay it back in full. Initial payments go toward interest rather than principal, which shifts over time.

calculating cost


The majority of mortgage providers will not lend money unless the property is insured. This is because the building may be damaged or destroyed during earthquakes and hurricanes. As this is the case, the debtor will stop making payments. Lenders require insurance because it safeguards their investment.

Many property owners choose to insure their home’s worth and possessions. This is because they invest heavily in the interior design. As a result, they want to safeguard that investment against potential disasters. This also raises the price of owning a home.

Maintenance And Upkeep

After a house sale has closed, the buyer is responsible for paying for any necessary repairs or upkeep. If the home was bought with the best home warranty, all repairs or replacements needed for a system or appliance that had been properly maintained would be covered.

Most home repairs and replacements only require a one-time, flat-rate service call fee which is covered by the best house warranty. The best home warranty will help homeowners save money on repair costs which typically amount to 1 to 4% of the home’s value.

What It Comes Down To

Many expenses can arise as a homeowner, but there’s no need to worry. As unexpected costs pop up from time to time, it helps to have a nest egg to draw upon. You should put aside at least 1% of the home’s purchase price annually to cover upkeep costs.

The home’s age, current condition, and local climate are all potential contributors to cost overruns that could significantly impact this estimate.

But it’d help if you didn’t let the chance of unexpected costs stop you from buying a home. Many people who decide to invest in real estate can save large sums of money.

casanovabrooksCasanova Brooks is a real estate entrepreneur. With a background as a licensed realtor at Berkshire Hathaway and currently serving as a Change Agent at eXp Realty, Casanova brings a wealth of expertise and experience to the table. Beyond real estate transactions, Casanova is a seasoned motivational speaker, author, and podcast host. His book, “Real Estate: Play the Game Like the Winners,” reflects his commitment to sharing insights and strategies for success in the ever-evolving world of real estate. Join him on his journey as he continues to make waves in the world of real estate and beyond.

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