The Hidden Costs of Buying a Home: About $32K More Than Buyers Expect

By Melissa Dittmann Tracey

Tell your home buyers they’ll need more than just a down payment when purchasing a home. Otherwise, they may face a financial surprise.

A new study shows that recent home buyers spent an average of $31,502 on additional home-buying expenses beyond their down payment. That’s nearly four times the roughly $8,000 they expected and had planned for, according to a newly released report from Best Interest Financial and Clever Real Estate based on a survey of 1,000 recent home buyers.

The study found buyers spent the following on expenses after purchasing a home:

• Repairs and improvements during the first year of ownership: $15,073
• Concessions to the seller: $7,678
• Closing costs: $5,719
• Moving costs: $3,032

For many home buyers—particularly first-time buyers—the added expenses came as a surprise and often pushed them beyond their budgets. For example, first-time buyers reported spending an average of $16,000 on repairs during their first year of ownership, and they were more likely than repeat buyers to purchase a fixer-upper, which can considerably add to costs.

Overall, 73% of buyers said they would have made different decisions had they known about these costs ahead of time. Many reported post-purchase regret, including wishing they had negotiated more or that they hadn’t underestimated post-purchase expenses or exceeded their budgets.

The most surprising home-buying costs buyers reported were:

• Repair and upgrade costs: 18%
• Closing costs: 16%
• Property taxes: 14%
• Moving costs: 12%
• Homeowners insurance: 9%
• Ongoing maintenance costs: 8%

Looking back, many buyers said they would have budgeted about $38,000 in additional costs for their home purchase, the report found.

Real estate professionals can help buyers plan ahead for these expenses. For example, agents can encourage buyers to carefully review inspection reports, negotiate repairs, or bring in a contractor to estimate costs upfront. They also can help buyers gather estimates for utilities, any homeowner association fees, property taxes and homeowners insurance estimates while preparing their homeownership budget.

 

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