NJ Real Estate: Hidden Fees and Costs You Need to Know About

nj real estate

Your home is likely to be the most expensive financial investment you will make in your life. Just a few of the “hidden charges” in buying a home include: closing costs, property taxes, home owner’s insurance, and fees charged by a variety of experts throughout the purchasing process. For the unsuspecting home buyer, hidden fees and miscellaneous costs associated with buying a home can come as a big shock. To help you budget for this major purchase, we’ve compiled a descriptive list of some costs you might not be preparing for.

Closing Costs

The time it actually takes to close on a property is typically somewhere between 30 and 60 days. During this time, the sale is considered to be pending as you work out the details with the seller. At the end of the closing process you’ll make a major payment towards your new home in the form of closing costs. Closing costs typically range anywhere from 2% to 5% of the purchase price of the home. The charges included in closing costs can include fees for appraisal, wire transfers, credit report assessment, title insurance, document preparation, and many other closing-related processes.

Home Inspection Fees

While a home inspection isn’t a requirement, unless you happen to be an expert real estate inspector, hiring a professional is something you should really consider. You will be able to purchase the home with confidence in its condition or save yourself money in repair costs by alerting to seller to necessary repairs. Putting aside money in your budget for a home inspection can save you a lot of money in the long run.

Home Owner’s Association (HOA) Fees

If your home is located in a gated community, chances are high you will be required to join the HOA. Monthly HOA fees go toward community maintenance and repair of common areas, like sidewalks, entrance-ways, parking areas, and landscaping. Some HOA fees can be surprisingly pricey so it is important to know about them before you sign the dotted line.

Property Taxes

Depending on where you live, property taxes can cost you a lot. New Jersey is well-known for having very high property taxes across the state, but some areas of NJ have more reasonable tax rates. The average property tax bill in NJ ranged from $450 in Walpack Township, Sussex County to nearly $32,000 in Tavistock Borough, Camden County. Pay attention to the property taxes in the area you are looking to buy. It can make a huge difference in your bottom line.

Real Estate Agent Fees

Real estate agents make a living via commission. The average rate of commission in NJ is 5-6% of a home’s sale price. Real estate agents on both sides will be offered part of the commission. Both agents will be paid out by money the buyer gives the seller for the home at the time of closing. It is the seller’s responsibility to ensure both agents get their commissions out of this money. The rate of commission is pre-determined and agreed upon by both sides before closing. For instance, if it is decided the seller’s agent will receive a 3% commission and the buyer’s agent will receive a 2.5% commission on the sale of a $210,000 home, the seller’s agent will receive $6,300 and the buyer’s agent will receive $5,250.

These are only some of the hidden costs associated with purchasing a home. You don’t want to be blindsided by financial pitfalls after you find your dream home. If you’re thinking about buying a home, or if you’ve already signed a contract and you’re in the attorney review period, we’re more than happy to look over the contract for you and answer any questions you may have. Visit our website and call us at the location that is most convenient for you – we have offices in Wall, Bordentown, and Metuchen.

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