Purchasing a home of your own is a one-time decision for homeowners. Real estate transactions include many hidden costs that homeowners are unaware of. These hidden costs can quickly add to the final price of the home. They can include the cost of maintenance, covering stamp duty, and registration fees.
Unexpected costs will affect homeowners’ budgets and disturb their financial planning. This blog guides homeowners on the hidden costs of real estate transactions, which they must know.
Why is it necessary for the homeowners to know the hidden costs?
Hidden costs can become a major issue when buying a new home. It is necessary for the homeowners to know all the hidden costs besides the maintenance because of the following reasons:
● High budget
Unexpected expenses will increase the overall cost of the home. Homeowners with a low budget will face financial burdens while buying a new house. They may have to break their savings to complete real estate transactions.
● Loss of trust among the buyers
Hidden costs can break trust of the buyers and affect the deal in the transaction. Sellers and agents may not get the best deals from the buyers.
● Delayed transactions
Unexpected expenses will delay the transactions of buying and selling homes. They will affect the closing process and increase the additional costs in the real estate transactions.
Homeowners who are aware of these hidden costs can plan better and smarter while buying a new house.
Common types of hidden costs in real estate transactions
If you plan to buy a dream home, consider the hidden costs in the transactions.For instance, if you’re exploring flats for sale in Selaiyur, Chennai, understanding the area-specific charges and fees can help you plan your finances better. Here is the list of hidden costs included in the cost of buying a home:
1. Commission of broker and agent
The total cost of the property may include a brokerage fee. This fee is applicable when a real estate agent helps the owners in buying a home. The brokerage fee may change according to the agent’s location and services.
The best way to overcome this issue is by asking a written agreement from the broker. The homeowners can negotiate the rate to receive the affordable deal.
2. Covering Stamp duty and registration fees
One of the most common hidden costs in real estate transactions is covering stamp duty. State government imposes stamp duty on the various transactions of the property. A stamp duty is between 5% and 7% of the value of the home depending on the location.
Another major hidden cost in the process of buying the home is the registration fee. Normally, the registration fee is about 1% of the value of the property.
3. Legal fees and documentation
Most real estate transactions include the legal and documentation fees. Many homeowners are not aware of legal fees. The registration fees can include additional expenses and other costs for registering the home in the name of the owner.
4. Charges for a premium location
Builders and developers charge an extra amount for the best views and locations of the property. The homes on high floors and with views of lakes or the park may include additional costs. These costs may differ according to the state and the unique features of the home. Including Preferential location charges will increase the overall cost of the property. The homeowners must consider the panoramic views and position of the house against the additional expense.
5. Home loan processing charges
This is one of the most common costs included in the process of borrowing a loan. A large part of home buyers take a home loan to purchase a new property. The lenders will include a processing fee in the loan, which differs from bank to bank. The home loan processing fee is non-refundable even if the home loan application is rejected by the bank.
If you are taking a home loan, ask the lender to provide the detailed information of the registration fees. Sign an agreement only after knowing the total fees included in the home loan process.
6. Charges for parking space
The parking fees change according to the space, state, and location of the property. Developers consider the parking fees separately from the base cost of the apartment. The fees of covered parking lots are higher than uncovered spots because of added protection from dust and allergens.
The parking space near lifts or elevators has a higher charge than the ones that are far from entrances or lifts. The homeowners must confirm the parking costs before signing an agreement. For an additional space, the homeowners must ask the rate and then finalize the deal.
7. Costs of home inspection
A full inspection of the new property or home is an important step before buying any home. It shows all the potential issues in the new home or property. The cost of a professional inspection is high. It differs according to the space of the home and location. On the other hand, the home buyers must also pay for repairs if the home includes any issues.
Owners can hire the services of a trusted home inspector to reduce the extra cost of repairs. They can also talk with the seller to provide the repair costs for a reasonable price.
8. Charges for utilities
The homeowners have to pay charges for various facilities available in the home. These charges include utility bills, electricity bills, water bills, and charges for internet services. The costs of utilities may vary according to the use and location of the home.
9. Property tax
A property tax is the most common type of charge included in the price of a new home. It is an ongoing cost which many buyers do not consider while purchasing the property. The property tax varies according to the value of the home and location. Delayed payment of property tax may lead to fines.
Buyers must research the rates of property tax in the area. They must pay taxes timely to avoid fines.
Conclusion
The price of a new home can include many hidden costs beside the maintenance cost which you might not know. It is important to take a note of all the hidden costs related to the purchase of a new home. You must ask the developers to provide a complete breakdown of the hidden costs or research properly to avoid extra charges. Planning the budget will fulfill your dream of buying a home.
