What Fees Are Associated With Buying a House Cash?
Buying a home with cash? Learn about the necessary closing costs, legal fees, and other expenses you'll still encounter for a successful purchase.
While purchasing a home with cash removes the complexities and costs associated with a mortgage, it does not eliminate all expenses. Various fees are still necessary to ensure the legal transfer of property, assess its condition, and establish initial ownership. These charges are a fundamental part of the real estate transaction, covering administrative, legal, and due diligence aspects. Understanding these fees is important for any cash buyer to accurately budget and prepare for the total cost of acquiring a property.
Fees for Title and Transfer
Ensuring clear ownership and legally transferring property involves several fees.
A title search is conducted to investigate the property’s public records, verifying legal ownership and uncovering any liens, encumbrances, or ownership disputes that must be resolved before the title can transfer. This search costs between $75 and $200, though more complex histories can increase the cost.
Following the title search, an owner’s title insurance policy protects the buyer against future claims or unforeseen issues with the property’s title. While not always mandatory for cash buyers, this insurance is highly recommended as it protects the buyer’s investment for as long as they own the home, with costs often ranging from 0.5% to 1% of the sale price.
Escrow or settlement fees are paid to a neutral third party who manages the transaction, holds funds, and prepares necessary documents. These fees can range from 1% to 2% of the home’s purchase price, or sometimes a flat fee.
Recording fees are government charges for officially registering the new deed and other transaction documents at the county or local level. These fees vary by county and document length, ranging from a few dollars to a few hundred dollars. Transfer taxes are levied by state or local governments on the transfer of real property. These taxes are calculated as a percentage of the purchase price and can represent a significant portion of closing costs, varying considerably by location.
Fees for Property Assessment and Legal Review
Beyond the legal transfer, evaluating the property’s condition and value often incurs additional fees, serving as important due diligence for the buyer.
A home inspection assesses the property for structural, mechanical, or safety issues. Although not required by a lender for a cash transaction, an inspection is widely recommended, with costs ranging from $300 to $500, but potentially higher for larger or older homes.
An appraisal can be sought by a cash buyer to independently confirm the property’s fair market value. While not mandated by a lender in a cash sale, this step can provide valuable financial reassurance. The average cost for a home appraisal ranges between $313 and $422. A property survey may be necessary to confirm property lines, identify easements, or detect encroachments. The cost of a land survey varies significantly based on property size, terrain, and the type of survey needed, ranging from $475 to $5,500.
Attorney fees may also be part of the closing costs. Even where not required, a buyer might choose to hire an attorney for legal advice, contract review, and closing representation. Real estate attorney fees can range from $500 to $3,000 for a home sale. These professionals ensure all documentation is correct and legally binding.
Initial Property Ownership Adjustments
Certain costs of property ownership are adjusted and collected at the time of closing, even for cash buyers.
Prorated property taxes ensure that both the buyer and seller pay their share of property taxes for the current tax period based on their respective ownership durations. The buyer pays their portion from the closing date forward.
Homeowner’s insurance is another upfront cost, with the first year’s premium often paid at closing to protect the asset. While not legally required for cash buyers without a mortgage, securing coverage is prudent for asset protection. If the property is part of a Homeowners Association (HOA), initial or prorated HOA fees may also be collected at closing. These fees contribute to the maintenance and amenities of the community. These adjustments ensure that all ongoing property-related expenses are fairly divided and accounted for at the point of sale.