The Costs Before The Closing Table

Congratulations! You’ve done it. With a lot of planning and working hard, you’re ready to buy a home in Northern Kentucky! But is your bank account ready? Surprising to some, required of everyone, there are upfront costs to purchasing a home, and some are not part of the purchase price. Are you surprised? If so, read on.

Earnest money, inspection costs, appraisal fees, and then at closing, closing costs. These are the costs that will need to be paid out of pocket aside from the down payment for a home. It can add up so it’s wise to know what you may be spending in addition to the purchase price when you buy a home in Northern Kentucky.

Earnest Money: What is it and who gets it?

Earnest money basically tells the seller “I am serious about buying your home”. It lets them know you mean business and the more you put down for earnest money, the more serious you look.

In Northern Kentucky, earnest money usually runs about $500 for every $100,000 purchased BUT, and this is a big BUT, if you are in multiple offer situations you can use earnest money to your advantage. In this market, don’t be surprised if your REALTOR (like me) starts suggesting you to put more on the table.

Inspection time: The bulk of out-of-pocket costs.

During this period you can do whatever inspection you want. In the state of Kentucky an inspector or any professional giving a quote on repair must be a licensed professional during the home buying process. Because of this, some costs may be incurred but it’s important not to skimp on these, in the end, they can save you thousands.

General home inspections can be between $400 and $800 depending on the company you choose. Of course there are different levels of basic home inspections, $800 may include radon testing (it exists in Northern Kentucky homes), lead testing (something to consider for older homes in older cities like Covington, KY), and other more concentrated inspections. Most general home inspections include termite inspections but it’s always good to ask.

Other home inspections I highly recommend are

  • Surveys
  • HVAC inspection
  • Structural
  • Plumbing
  • Electrical (if the home is older)
  • Radon (if the inspector has concerns and this can be done by the general inspector many times)

Here’s why:

Wouldn’t you like to know just what land you’re buying when you plan on shelling out hundreds of thousands of dollars? Don’t assume the fence is the boundary line. Don’t assume that play equipment or grill is on your property either, home-owners do wacky things. Surveys for Northern Kentucky real estate can run $400 and up.

Many home warranty companies now will not cover your HVAC unless you have a certificate of good health (for your HVAC) from an HVAC technician. If the previous home owner did not get regular maintenance, this might be a good idea. It can be free, especially if you get a yearly maintenance package with them, to $200 and up.

Getting a plumbing inspection can save you thousands of dollars in the long run. Especially if you live in an older house that may have clay or lead pipes underground. And yes, I said lead pipes. Plumbing inspections are $150 and up in Northern Kentucky, don’t be afraid to call around.

BONUS: If you plan on gardening in your back yard, get a soil/environmental inspection. You can read why here.

The Appraisal: The final decision.

Whew… Inspections are anxiety inducing. And this is why it’s important and smart to work with a REALTOR who knows Northern Kentucky real estate (like me). I can guide you, one step at a time through this whole debacle and it won’t seem so overwhelming.

So back to appraisals. Just because a seller accepted your offer of $250,000 doesn’t mean your lender will just shell out the money. The appraiser, hired by the lender, must price the home at or above purchase price. If they don’t, the lender won’t lend and you will be back at the bargaining table again.

What’s the damage? About $500 in Northern Kentucky. I’ve seen more, I’ve seen less and it must be paid to your lender and completed before they can pass your file onto the underwriter. Holding them up by non-payment can hold up the entire process and put your contract in jeopardy and not the fun game type, the scary, you-might-not-get-a-house type.

So in total you should expect about $1,500 minimum for out of pocket costs. For budget’s sake, over estimate on everything. If the home you are planning on buying is larger than 5,000 sq. ft., unique in location or character (think historical), it could be much much more out of pocket before you sign on the dotted line.

If you are still confused about the out-of-pocket costs of buying a home I’m here to help. You can call or text me at (859) 667-2463 or email me at

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