The HIDDEN COST of buying Real Estate…

Here’s a topic that very, very few people mention when they make videos on buying or investing in Real Estate…these are the hidden costs associated with buying property, and exactly what they are. Enjoy! Add me on Snapchat/Instagram: GPStephan

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What’s the first cost you have to incur? INSPECTIONS. This is when you have the ability to inspect the property for any defects or needed repairs, and then decide if this is a deal you feel comfortable buying. Depending on the type of property and age of the home, a basic inspection can run you anywhere from $350 all the way up to $3000.

After you’ve done your inspection, you have to pay for your appraisal. Anytime you’re getting a loan from the bank, they will require an appraisal that proves the home is actually worth what you’re buying it for. Appraisals are usually done within a week after the seller accepts your offer, and usually runs anywhere from $400-$1000 for the most part depending how many units you’re buying, or if it’s just a single family home or condo.

While we’re on the topic of loans, the bank LOVES to charge you fees…lots of fees. Many banks will charge about half a percent to upwards of 1% of the loan amount as their origination fee. This means on a $500,000 loan, you could potentially pay $2500-$5000 as a mortgage fee.

Next, you have to make sure your insurance paid for by the time you close.

And by now, this brings us into our “Escrow” Fees…in some states you have “lawyers” who handle the transaction, in California we have escrow companies. In California, they typically charge $2 for every $1000 of purchase price, plus sometimes a base fee in addition to that. So on a $500k dollar home, you’re looking around $1000-$1500 plus whatever base fee they might have.

Then you have TITLE FEES. A title company ensures that the deed to the property can be delivered free and clear of all encumbrances and liens…basically, it means that you can take full ownership to the property without worrying that someone else is out there also claiming that they are the legal owner. I’d say this ranges anywhere from $500-$1200 depending on the type of property, title company, and what’s involved – again, there can be several factors that play into this.

And then…last but not least…you have miscellaneous fees that can add up. A $250 notary fee. A $65 overnight messenger fee. A $30 audit fee, etc…we can just chalk this up to an extra $500 in random, miscellaneous things.

TOTAL: $6000-$13,982

You’ll see now that we have a wide range of expenses…here in California, I’m assuming the typical $500,000 house. Obviously closing costs of nearly $14,000 IS EXTREMELY EXCESSIVE, but it really depends on so many factors and what type of companies you opt in for, whether it’s single family or multi family, whether it’s owner occupied or for investment, what insurance you get, and whether or not you can negotiate these rates with the companies. I’d always recommend shopping around and negotiating to get the lower rate EVERY SINGLE TIME YOU BUY SOMETHING.

For business inquiries or paid one-on-one real estate investing/real estate agent consulting or coaching, you can reach me at GrahamStephanBusiness@gmail.com

Suggested reading:
The Millionaire Real Estate Agent: http://goo.gl/TPTSVC
Your money or your life: https://goo.gl/fmlaJR
The Millionaire Real Estate Investor: https://goo.gl/sV9xtl
How to Win Friends and Influence People: https://goo.gl/1f3Meq
Think and grow rich: https://goo.gl/SSKlyu
Awaken the giant within: https://goo.gl/niIAEI
The Book on Rental Property Investing: https://goo.gl/qtJqFq

Favorite Credit Cards:
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American Express Platinum – https://goo.gl/C9n4e3

17 thoughts on “The HIDDEN COST of buying Real Estate…”

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  2. Damn yo that’s ALOT of stuff to take in but Thanks tho!

    I’m just curious if all this negotiating with the bank and seller actually will work in Canada lol

  3. Awesome video. Love the breakdown and examples. I'm looking forward to more videos of the intricacies of real estate deals.

  4. Really solid advice. It's too easy to slap the wall if you don't budget for things like what Graham listed. Not only with real estate, but buying cars, or similar things with a title. Hell, I know someone who had to sell her house after trying to start a business and she got into trouble with unexpected expenses and also with a loan she took to start the business; although she was doing plenty of other very stupid shit at the time, it could have turned out much better if she had known every expense beforehand and budgeted for it all.

  5. Oh man! I've been looking for a house for awhile (in GA), and I had no clue how much of this stuff was negotiable! I'm overwhelmed, but this video is at least opening my eyes to the possibilities of preventing overpaying! Since I'm usually asking under the sellers price (I've only made one offer that wasn't accepted so far)…I feel that I can't ask a lot of what you are saying…but maybe I can ask for some…wow!

  6. 1 minute into the video and this is the reason why I subscribe and watch all your videos over others who I won’t mention LOL. Thanks for looking out.

  7. Here is how it works in Seattle. Ok, seller, I would like a credit towards by closing costs and xxx repair costs. … buyer, I have a list of 10 buyers bidding against each other, so 'no ' to whatever you have to say.

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