The hidden costs of buying a home: 16 unexpected expenses to anticipate

Unveiling the overlooked expenses when acquiring a new home, this article delves into practical advice and hidden costs that every prospective homeowner should be aware of. With insights from real estate experts, readers will gain access to valuable information that could save them from future financial surprises. Navigate the complexities of the home-buying process with confidence, empowered by the knowledge of industry professionals.

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  • Set Aside Extra Funds for Repairs
  • Invest in Specialized Inspections
  • Budget for Mold and Wiring Issues
  • Prepare for Closing Adjustments Costs
  • Inspect for Cast Iron Sewer Lines
  • Budget for Last-Minute Repairs
  • Get Early Pest and Building Inspections
  • Check for Property Tax Reassessments
  • Plan for Prepaid Taxes and Insurance
  • Research Land Transfer Tax
  • Thoroughly Inspect for Pest and Drainage Issues
  • Prepare for Appraisal Fees
  • Require Professional Deep Clean
  • Negotiate Repairs Before Closing
  • Budget for Home Inspection Costs
  • Verify Zoning Laws Before Purchase

Set Aside Extra Funds for Repairs

One unexpected expense I encountered during the home buying process was the cost of unexpected repairs after the inspection. When purchasing my first property as a short-term rental, the initial inspection missed some critical plumbing issues that needed immediate attention. The repair bills were a shock, adding thousands to my budget unexpectedly.

To prepare for this, I recommend setting aside an extra 5-10% of your home’s purchase price as a contingency fund for potential repairs. Additionally, choose an inspector with specific expertise in older homes if you’re buying an older property. It’s crucial to have thorough inspections done and consider having specialists review key areas to catch potential problems early. This strategy has saved me from costly surprises in subsequent purchases, and I make sure to budget for these contingencies in every property investment I make.

Sean Swain, Company Owner, Detroit Furnished Rentals LLC

Invest in Specialized Inspections

I encountered a particularly eye-opening situation with foundation issues that taught me a valuable lesson about the importance of thorough pre-purchase investigations. This experience has since helped me save countless buyers from similar unexpected expenses.

I was working on purchasing what seemed like a straightforward property in a well-established neighborhood. The initial home inspection raised no major red flags, but I noticed slight unevenness in the floors that the inspector hadn’t highlighted. Rather than brush it off, I decided to invest in a specialized foundation inspection—something I hadn’t typically done before. This additional inspection, which cost about $500, revealed significant foundation issues that would have required $25,000 in repairs. The standard home inspection hadn’t caught these problems because they were subtle and required specialized equipment to detect.

This experience transformed my approach to due diligence. Now, I always advise buyers to go beyond the standard home inspection and invest in specialized inspections based on the property’s age, location, and specific characteristics. For homes over 25 years old, I recommend getting separate assessments for the foundation, electrical system, and plumbing. While these additional inspections might cost $1,000-2,000 upfront, they can save tens of thousands in unexpected repairs later.

Another crucial step I’ve learned is to research the property’s history thoroughly. Request documentation of any previous repairs, especially for major systems like foundation, roof, or plumbing. Additionally, check local building permits to ensure all previous work was properly documented and completed. In areas prone to natural disasters or specific environmental issues, consider getting specialized environmental assessments.

The key takeaway from my experience is that while these additional inspections might seem like unnecessary expenses during an already costly home-buying process, they’re actually invaluable insurance against much larger unexpected costs down the line. It’s always better to know about potential issues before closing when you still have negotiating power or the ability to walk away from the deal.

Cesar Villaseñor, Real Estate Investor, Click Cash Home Buyers

Budget for Mold and Wiring Issues

Being a real estate investor, I got blindsided by a $4,000 mold remediation cost that wasn’t visible during our initial walkthrough of a property in Newark. I now always recommend buyers set aside at least 2-3% of the purchase price as a buffer for these hidden issues—it saved one of my clients from serious stress when they discovered old wiring that needed immediate replacement. What’s worked best for my buyers is getting a specialized mold inspection before closing, even if it costs an extra $300-400, since it’s way cheaper than dealing with surprises later.

Samuel Colon, Founder, WE BUY NJ REAL ESTATE

Prepare for Closing Adjustments Costs

For me, one of the most unexpected expenses when buying a home was the cost of closing adjustments. People often budget for the down payment, legal fees, and home inspections, but what caught me off guard in my early days was how property tax adjustments, HOA fee proration, and even utility bill reconciliations could add up at closing.

In my opinion, the best way for buyers to prepare for this is to get a clear breakdown of all potential closing costs from their real estate agent or lawyer early on. Ask about property tax adjustments—if the seller has prepaid their property taxes for the year, you might owe them a prorated amount at closing. Same with HOA dues; you could be responsible for a portion of those if the seller has paid in advance.

To avoid getting caught off guard, I always recommend buyers set aside an extra 1.5-2% of the home’s purchase price as a buffer for these unexpected costs. It’s not always necessary, but it’s far better to be over-prepared than scrambling last minute.

Adam Chahl, Owner / Realtor / Interior Designer, Vancouver Home Search | Place Real Estate Team | Oakwyn Realty | Vancouver, BC REALTOR

Inspect for Cast Iron Sewer Lines

One of the most unexpected and financially devastating expenses a homebuyer can face is discovering broken cast iron sewer lines in their new home. Because they’re buried underground, they’re out of sight—and unfortunately, out of mind for many inexperienced buyers.

That’s a mistake and will be a big unexpected expense.

Owning a home with deteriorating cast iron plumbing is a ticking time bomb. Eventually, you’ll wake up to raw sewage backing up into your shower or bathtub—a nightmare scenario no new homeowner wants to experience. The cost to repair or replace these pipes is significant, ranging from a few thousand dollars for spot repairs to upwards of $20,000-$30,000 for a full sewer line replacement.

We’ve completed over 2,800 real estate transactions, and cast iron sewer lines are our #1 concern when evaluating properties in Texas. The best way to avoid this homebuyer sewage nightmare? Always get a sewer scope inspection before buying a home, especially if it was built before the early ’80s. This simple step can save you from one of the most expensive and unexpected homeownership expenses.

Patrick Schultz, Co-Founder, Bright Bid Homes

Budget for Last-Minute Repairs

One of the most unexpected expenses I ran into when buying a home was the cost of a last-minute repair that popped up during the final walk-through. Everything seemed fine during the initial inspections, but right before closing, we discovered an issue with the water heater. It wasn’t a total disaster, but it was leaking just enough to be a problem. At that point, negotiating with the seller was tough because we were so close to closing, and I ended up covering the cost myself to keep the deal moving. It was an annoying surprise, but it taught me a valuable lesson: always budget for the unexpected.

A lot of buyers assume that once inspections are done, they’re in the clear, but small things can still come up at the last minute. That’s why I always recommend setting aside extra funds—somewhere around one to two percent of the purchase price—for unexpected fixes. Even if nothing goes wrong, you’ll likely want to make a few changes once you move in, whether that’s replacing old appliances or fixing up little things you didn’t notice before.

Another way to avoid surprises is to be extra thorough during your final walk-through. Test everything—run the faucets, flush the toilets, check for leaks. If you find something, don’t be afraid to push back and ask the seller to handle it before closing. Buying a home is exciting, but it’s also full of curveballs. The best thing you can do is stay flexible, expect the unexpected, and be prepared to handle whatever comes up.

John Gluch, Owner, Gluch Group

Get Early Pest and Building Inspections

One unexpected expense that comes to mind is the cost of pest inspections. Many buyers do not seem to realize how important these inspections are until they are already deep in the process. I had a client who found a beautiful home, only to discover termite damage after the inspection. The repair costs were more than expected, and it was beyond their budget.

To avoid this, I always recommend clients get pest and building inspections early on, even if they are in a competitive market where the focus is often on price and location. It’s easy to overlook these details, but they can save you from major surprises down the road. There are cases where these inspections were the difference between making an informed decision and stepping into a financial headache. Always factor in these additional checks when budgeting for your new home.

Sebastian Wade, Real Estate Consultant, Eden Emerald Buyers Agent

Check for Property Tax Reassessments

One unexpected expense I faced when buying a home was a much higher property tax bill than I had planned for because the home’s value had been reassessed by the county. I learned the hard way that tax rates can change and a low estimate from the seller doesn’t always reflect what you’ll actually pay. To avoid this, buyers should check the home’s past tax records, ask if a reassessment is coming, and set aside extra funds in case taxes go up after closing. Planning ahead can prevent a surprise bill and help keep your budget on track.

Charissa Bright, Owner, Bright Buys Houses

Plan for Prepaid Taxes and Insurance

One unexpected expense I ran into during the home-buying process was the cost of prepaid property taxes and homeowners insurance at closing. I expected closing costs to include things like lender fees and title insurance, but I didn’t realize I’d have to pay several months’ worth of taxes and insurance upfront. Depending on the timing of your closing and your local tax schedule, this can add up to thousands of dollars you weren’t budgeting for.

To avoid being caught off guard, I’d recommend asking your lender for a detailed breakdown of estimated closing costs as early as possible. Those numbers can fluctuate, so check in again as you get closer to closing to make sure you have enough set aside. It also helps to have some extra cash on hand beyond your down payment to cover surprises. If the costs seem too high, you can sometimes negotiate with the seller to cover a portion of them. Being prepared for these expenses makes the final steps of buying a home a lot less stressful.

Parker McInnis, Owner, Speedy Sale Home Buyers

Research Land Transfer Tax

One unexpected expense that caught me off guard when buying my first home was the land transfer tax. This is one of the closing costs you pay to the state, municipality, or both depending on where you’re buying. I had planned for all the closing costs, but somehow, this one slipped through. Luckily, I had set aside some extra funds just in case of unexpected events like this so it wasn’t as stressful as it could have been.

This is the very advice I would like to give to homebuyers—always keep a little extra funds in hand for “just in case” instances like this. Trust me, it’s better to have it and not need it than to need it and not have it. Next, make sure to do your homework on the land transfer tax. Usually, the more expensive the property, the higher the tax. You might also qualify for a land transfer exemption, so look into that as well. A little bit of research and financial preparedness will go a long way in making the buying process smoother and less stressful.

Robin Cherian, CEO, The Canadian Home

Thoroughly Inspect for Pest and Drainage Issues

As surveyors and home inspectors, we come across a vast range of issues that cost buyers hundreds or even thousands after moving in. There are, however, some problems that need to be sorted out before buying and moving into your new property. These include pest control and drainage repairs. Avoiding sorting these out can lead to health hazards and structural damage, incurring further costs down the line. We would always recommend a thorough home inspection prior to buying a property. If issues such as rodent infestation or blocked drains are identified, there is opportunity to negotiate with the seller. This can result in either a lower purchase price, or an agreement that the issues will be rectified by the seller before the property is sold.

Kim Allcott, Partner, Allcott Associates LLP

Prepare for Appraisal Fees

During the home-buying process, one surprising expense I encountered was a steep appraisal fee. I always recommend my clients be prepared for this cost and consider mitigating it by researching comparable homes in the area beforehand. Appraisal fees are typically paid by the buyer and can range from a few hundred dollars to over a thousand depending on the size and complexity of the property. This is an essential step in the home-buying process as lenders rely on appraisals to determine the value of the property before approving a loan.

To prepare for this potential expense, buyers should research similar properties in the neighborhood and have an idea of what they believe is a fair market value for the home they are interested in. This will provide them with a basis for negotiating if the appraisal comes back higher than expected. Additionally, buyers can also request to be present during the appraisal process and provide any information or details about the property that may affect its value. This can include recent upgrades or renovations, specific features of the home, or unique aspects of the neighborhood.

John Medina, Chief Executive Officer, John Medina Buys Houses

Require Professional Deep Clean

One unexpected expense many homebuyers encounter is cleaning the home after closing. If the property was owner-occupied, the seller is under no obligation to perform a deep clean, meaning you could be left with a home that needs deep cleaning before you can comfortably move in.

To avoid this, include a special condition in the contract requiring a professional deep clean, with receipts provided. This ensures the property is handed over in a clean state. Additionally, conducting a walkthrough inspection allows you to check the property before finalizing the purchase, ensuring it’s in the agreed condition and that no unwanted items have been left behind.

Anna O’Neill, Director, Anna O’Neill Buyer’s Agent

Negotiate Repairs Before Closing

During the home buying process I was really surprised at the cost of repairs that were found during the home inspection. The inspection showed some issues with plumbing leaks and electrical problems, even though it seemed to be in great condition at first glance. Those problems had to be fixed before closing. I was glad to have a thorough inspection done by a pro. And I recommend having some room in your budget for potential repairs like this just in case. You could also talk with the seller and negotiate a credit towards repairs before the sale so you don’t end up with this surprise.

Shawna Newman, Marketing Director, Plot Property Group

Budget for Home Inspection Costs

A frequently overlooked yet significant expense in the homebuying process is the cost of a home inspection. A home inspection is crucial in identifying any potential issues or problems with the property before finalizing the purchase. It can range from a few hundred dollars to over a thousand depending on the size and age of the home. Many buyers assume that this cost will be covered by their mortgage lender or included in closing costs, but this is not always the case.

To prepare for this expense, I always advise my clients to budget for a home inspection even before starting their house hunt. This way, they are not caught off guard and have the necessary funds available when they find their dream home. It’s also important to do some research beforehand and compare prices of different home inspection companies in your area.

Erica Nunley, Founder & CEO, Nunley Home Buyers

Verify Zoning Laws Before Purchase

When it came to spending the most money on a home that I was going to purchase, one expense that caught me off guard was the budget required to relocate because of zoning issues. I bought a house that I intended to convert into a small business, but found out after closing that there were local zoning restrictions that forbade specific types of home-based businesses. This meant legal consultations, permit applications, and eventually, renting a separate workspace—none of which I had anticipated.

So that this does not happen again, buyers not only need to check zoning laws, but also talk to the local planning department regarding what their prospective home use is fully allowed. Whether this is business-related, parking a rental RV, or adding a unit. A little bit of extra research can save so much trouble later.

Ali Lijee, CEO, My Wind Screen

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