Real Estate

11 Unexpected & Hidden Costs of Buying a Home

By Meela Imperato
11 Unexpected & Hidden Costs of Buying a Home

Whether you’re searching for your first house or preparing to sell a property for the first time, you might be looking for an overall estimate for the unexpected costs of buying a home.

As a buyer, the hidden costs of buying a home can increase your total due at closing—if you’re freeing up cash for closing day by selling assets or liquidating a savings account, it’s critical to include these additional costs in your calculations to make sure you actually have enough to close.

As a seller, unexpected costs can eat into your sale proceeds. Since you’ll be legally or contractually obligated to pay some of these, you should account for them when you decide whether or not to sell your house in the first place.

In this guide, we’re exploring eleven of the most common unexpected costs of buying a home (or selling) a home. 

#1 Closing Costs

While most are familiar with the term “closing costs,” they don’t always know what’s tucked under this umbrella of expenses that buyers and sellers incur on top of the property’s sale price.

We’ll explore some closing costs in more detail below, including:

  • Loan origination fees
  • Prorated property taxes
  • Real estate agents’ commissions

But these are just three of the costs you’ll encounter at closing. Before you make an offer, ask your agent, the seller’s agent, or your lender to provide estimates for:

  • Loan application fees
  • Attorney fees (if applicable—some states require them in all real estate transactions)
  • Escrow fees
  • Credit reporting fees
  • Escrow
  • Title insurance fees
  • Points and prepaid interest
  • Private mortgage insurance (PMI) premiums
  • Appraisal fees
  • Recording fees
  • Title search fees
  • Transfer taxes
  • Underwriting fees

As a buyer, you should expect to pay approximately 3–6% of the sale price in closing costs. While the costs may not be negotiable, buyers can ask sellers to pay some (or all) of the closing costs during the contract negotiation process.

#2 Home Appraisal

A home appraiser determines the fair market value of a property—they provide (theoretically) unbiased value estimates based on local market data, the condition of the property, and other key information.

While you don’t need to learn how to get a home appraisal for every property, there are a few scenarios where it can be useful (or even required):

  1. Loan transactions – If you’re a buyer applying for a mortgage to purchase a home, your lender will likely require a home appraisal. Their loan amount likely won’t exceed the appraised value—the collateral (the property) must be worth more or the same as their investment (your loan). 
  • Seller preparations – If you’re planning to sell a property and you’re trying to determine a fair asking price, an appraisal can help you determine what your home is worth. 

Appraisal prices can vary widely, but for a typical, single-family home, the cost can range from $300 to $450.

#3 Home Inspection

Unless you’re a construction or real estate professional (or a home inspector yourself), you’ll likely benefit from an inspection as a buyer. A professional home inspector assesses a property for damage or potential problems, compiling a report of these concerns.

If you’re applying for a loan to purchase a home, your lender will likely require an inspection to ensure that their collateral (the property) is in sufficient condition. If you’re purchasing a homeowner’s insurance policy, your insurer might also require a copy of this inspection.

The average cost of a home inspection in 2022 was $340, but prices can vary based on home size, location, and other factors.

#4 Loan Origination Fee

A loan origination fee is one of many closing costs you may have to pay as a buyer, but you can ask the seller to pay it during the negotiation process.

Loan origination fees cover the lender’s administrative costs for completing tasks like:

  • Filing the loan application
  • Processing the application
  • Underwriting the loan
  • Reporting lending activity to legal entities

Loan origination fees are typically between 0.5 to 1% of the total cost of the loan: the purchase price less your down payment.

Of course, if you’re purchasing a home in cash, you won’t have to pay loan origination fees (since you won’t be applying for a loan for the purchase price). 

#5 Earnest Money

Earnest money is, essentially, a deposit: a show of good faith to the seller that you intend to purchase a home after making an offer. Since it’s a deposit (like escrow, which we’ll discuss below), it’ll be deducted from the final purchase price on closing day. 

There are many scenarios where it makes sense to offer earnest money:

  • In seller’s markets (where sellers have more power in the real estate market than buyers), sellers will likely receive numerous offers on the same property. Buyers can offer earnest money to make their offers more appealing to sellers.
  • In cash transactions, earnest money can communicate sellers’ commitment to a property or demonstrate their financial ability to pay the total purchase price.
  • In aggressive markets, sellers may be hesitant to take their properties off the market while buyers complete the appraisal and inspections. Earnest money can show sellers that you’re serious about the purchase and justify taking the home off the market before closing.

#6 Property Taxes

At closing, the home buyer or the seller will cover the costs of property taxes. These are sometimes prorated: For instance, if you buy a home in October, the buyer or the seller will pay for three months of property taxes at closing. 

Property taxes are one common leverage point for buyers and sellers during the negotiation process. If you’ve made a highly attractive offer to a seller, it might be appropriate to ask them to pay property taxes during negotiation. If you’re a seller, you might ask buyers to pay property taxes if you foot the bill for any pre-close repairs or maintenance.

#7 Homeowners Insurance

While you can own a home without purchasing a homeowner’s insurance policy, buyers using a loan to cover their purchase are almost always required to retain an insurance policy

An insurance policy protects the lender’s asset (the property) from damage during the loan payoff process. During the application process, your insurer will likely inspect major structural elements of the home, like:

  • The roof
  • The exterior cladding components (e.g., siding, stucco, shingles)
  • Windows and other glass components
  • Plumbing systems
  • Electrical systems
  • HVAC (heating, ventilation, and air conditioning) systems

They’ll also assess the local history of the property, noting major weather events like hurricanes and floods (and perhaps offering coverage for these types of events, which your lender might require).

Applying for an insurance policy as a home buyer can also help you determine whether or not the property is a good investment: If the home you’re intending to buy is uninsurable, it might not be wise to purchase it in the first place. 

#8 HOA Fees

If you’re purchasing or selling a home in a neighborhood with a Homeowners Association (HOA), some of your HOA fees will be due at closing. The total will depend on the specific HOA and local regulations in your jurisdiction.

Like property taxes, sellers and buyers can negotiate to determine who will foot the bill for these costs. Buyers making attractive offers may be able to convince the seller to pay these, but sellers who perform significant repairs before closing will be less likely to want to cover HOA fees (and other negotiable costs) for buyers.

#9 Escrow

While escrow and earnest money are technically both “deposits” that are subtracted from the purchase price at closing, they have distinct purposes. 

While earnest money is typically used as a negotiation tool, escrow provides legal protection for both buyers and sellers. Buyers pay escrow to a third party (like a closing agent or title company), and these funds are released to the seller when the conditions of the purchase contract are met on closing day.

If the sale falls through, buyers typically get their escrow back. Earnest money, on the other hand, is typically not returned to buyers who back out. 

If you’re buying a home with a mortgage, you’ll likely keep paying into your escrow account after closing. A portion of your mortgage payment will be disbursed to your escrow account to cover costs like:

  • Homeowners insurance premiums
  • Property taxes
  • HOA fees (if applicable)

#10 Home Maintenance and Repairs

Costs for home maintenance and repairs might not seem like hidden costs of buying a home (or selling a home), but they should be a critical financial consideration for both buyers and sellers:

  • As a seller, you might be wondering, “How much do you lose selling a house as-is?” You could lose lots if you don’t make some investments in improvements before putting your home on the market. Your real estate agent can help you determine which investments are the most likely to generate higher sale proceeds or attract better offers. You may also have to sacrifice some sale proceeds (i.e., reduce the purchase price) to cover the costs of repairs that the buyer will have to complete after closing.
  • Buyers typically have some upfront investments to make after a sale, too. Purchasing any appliances that weren’t included in the sale, repairing anything that the seller agreed to help pay for (by reducing the sale price), or purchasing maintenance contracts from service providers (like pest control companies) are just a few examples. 

While it will be difficult to calculate some of these before closing, buyers should try to get a feel for their post-close repairs and maintenance costs for financial planning purposes.

#11 Real Estate Agents’ Commissions

Real estate agents’ commissions can also be a bargaining tool for both buyers and sellers. While sellers typically foot the bill for both seller and buyer agents, buyers who don’t make highly attractive offers might offer to pay for buyer agent commission fees as a show of good faith to sellers. 

Commissions are generally 6% of the total sale price, and buyers’ and sellers’ agents typically split this percentage (sometimes equally, but not always). If there are no real estate agents involved in your transaction, you won’t have to pay commission fees, but it generally behooves both parties to work with an agent.

How a Residential Sale Leaseback Program Can Help

The unexpected costs of home buying can certainly add up. If you’re already a homeowner looking to downsize, scale up, or liquidate your existing equity, consider an alternative to selling that can decrease your overall costs: residential sale-leaseback

In a sale-leaseback agreement, as a homeowner, you can sell your house and rent it back after closing. This can be beneficial for homeowners looking to purchase a new property, access cash for a major expense (like a medical procedure or assisted living costs), or reduce their total financial obligations each month.

If you need access to your home’s equity, but you can’t bear to part with your home, a sale-leaseback transaction might be the perfect solution.


  1. Investopedia. Closing Costs: What They Are and How Much They Cost. 
  2. Investopedia. What Is a Home Appraisal?. 
  3. Bankrate. How Much Does a Home Appraisal Cost? It Depends on Several Factors. 
  4. Forbes. How Much Does a Home Inspection Cost?. 
  5. Consumer Financial Protection Bureau. What Are Mortgage Origination Services? What Is an Origination Fee?. 
  6. American Family Insurance. What Are Origination Fees and Origination Points?. 
  7. Chase. What Is Earnest Money and How Much Should You Pay?. 
  8. Insurance Information Institute. Can I Own a Home Without Homeowners Insurance?. 
  9. Investopedia. How Escrow Protects Parties in Financial Transactions.
  10. National Association of Realtors. Earnest Money & Escrow Real Estate.
  11. The Real Estate Commission: How Much Are Realtor Fees?.
First Time Home Buyer
Written by Meela Imperato
Senior Director of Brand and Content, Real Estate & Finance Journalist

This article is published for educational and informational purposes only. This article is not offered as advice and should not be relied on as such. This content is based on research and/or other relevant articles and contains trusted sources, but does not express the concerns of EasyKnock. Our goal at EasyKnock is to provide readers with up-to-date and objective resources on real estate and mortgage-related topics. Our content is written by experienced contributors in the finance and real-estate space and all articles undergo an in-depth review process. EasyKnock is not a debt collector, a collection agency, nor a credit counseling service company.