When purchasing a new home or investment property, there are a lot of additional costs and fees associated with the transaction.

Some costs are associated with selling a piece of property, as well as the cost of purchasing one. These various fees are to different 3rd parties as well as the lender and are often referred to as “closing costs,” which are not to be confused with buyer “prepaid” when we will discuss after we break down the closing cost. In this article, we'll talk about the Buyer fees on a customary real estate transaction. These are fees that most buyers pay when buying a home and taking out a mortgage. Some of these fees may vary from state to state, but as a rule of thumb, these are the consistent fees you will see on a transaction.
Application fees - Just as it sounds, this is the basic fee that a lender will charge to process and take a borrower’s loan application. They do this to ensure that the borrower is serious, but it is also a revenue generator for the lender. While some lenders may not charge a fee at all, others may charge as much as $500. If you have an existing relationship with the bank, such as a car loan or checking account, it may be something you can ask and negotiate with them to reduce or eliminate.

Appraisal - To secure a mortgage, a lender will require an appraisal, and this is a fee that the borrower will need to pay. Residential appraisals vary in price, but they will cost somewhere between $500 - $700. This is one of those fees that lenders cannot get around or have much control over since the appraisals are assigned by a 3rd party process to avoid lender fraud and help protect the consumer by not having a property’s value falsely inflated to make the loan process work.
Attorney fees - The title pretty much sums up the description. These are the fees that the attorneys charge for the transaction to do several things. These fees can vary depending on the location and complexity of the transaction, but for a relatively simple transaction, you can anticipate them to be between $500 - $1,500, and they cover things like reviewing contracts and loan documents as well as being a general transaction counsel and facilitating the actual closing.
Document and Courier fees - This fee covers the cost of delivering all the necessary documents for the closing and generally costs $30 to $50. This is one fee that, in my opinion, you as a buyer should ask for to be waived since, in the day of modern technology, most documents are delivered electronically; however, a lot of buyers and their agents do not know that some of these fees can be negotiated and do not ask.

Real Estate Commissions - This is one fee that has historically and customarily been paid for by the sellers; however, with the recent lawsuit settlement in Burnett et al. v. The National Association of Realtors et al. where the NAR settled for violation of antitrust laws involving commissions. Now, as the new rules come into effect regarding commissions, this is a fee that you can see on either side of the settlement statement depending on how the contract and transaction are negotiated between the buyer and seller and their respective real estate agents.
Inspection fees – This is a transaction fee that you may have to pay regardless of whether you close on the home or not. It’s the fee to have the home inspected, and it is also an optional fee for you, the buyer, unless your lender requires it. Along with this fee, you may have a termite inspection fee, radon inspection fee, or lead base paint inspection fee. The home inspection fee, which is the most common, is around $500, while the other inspections can run anywhere from $150 - $500, depending on the size of the home and the level of detail you need.

Title Insurance (owner’s optional) - This is an optional policy that protects the buyer’s financial interests in the property from title issues. It covers the full value of the property and lasts if the buyer or the heirs of the buyer have an equitable interest in the property. It will protect against all claims that predate the purchase of the property, such as the previous owner’s failure to pay the contractor’s liens or property taxes. When purchasing a home, if the seller has a policy in place from their purchase, then there is a good chance that the same issuer will discount the policy for the new buyer. This isn’t a guarantee, but it is worth asking your real estate agent and closing title company representatives if there is an opportunity. The cost of these policies is set by state statutes and vary state to state, in Kentucky a title insurance policy will cost approximately 0.5% of the home price, but these rates can change with new state regulations, so it’s always best to consult the title agency for an exact quote.
Title Insurance (lender’s policy) – Unlike an owner’s title insurance policy, lender’s policies are not optional. This policy will protect the lender from title issues that could impact their investment in the property and only covers the amount of the loan and will expire once the loan is paid off in full. These rates can vary from state to state but are set by state regulations and generally cost less than 0.5% of the home purchase.

Title search/title exam fee – This is an exam of the property’s title records to verify the current owner’s legal rights to the property. It also looks for defects, liens, or other issues that can cause new buyer issues. If there is a mistake in the exam, your title insurance policy would cover the mistakes and defects, should you have happened to purchase it. Typically, a title exam costs between $200 - $300 and is paid at closing with the other closing costs.
Loan origination - This is a one-time fee that a lender charges a borrower for processing the loan. The fee is a percentage of the overall loan. Sometimes, it can be as low as 0.25% up to 2% of the loan. If you have the conversation at the start of your loan process, you may be able to reduce this fee significantly, especially if you are a class A borrower and have multiple options of lenders to choose from.
Recording fee – This is a fee paid to the local county office where the new deed and mortgage documents are recorded. These fees not only vary from state to state but can also vary from county to county within the state. Typically, you can expect this fee to be anywhere from $50 - 150 dollars.

Survey fees – Most states do not require a property survey to be completed for a real estate transaction, it is often recommended that you do one. This can cost anywhere from $200 - $700 on average, depending on who you hire to do it and how big the property they are surveying.
Credit report fee – This is the fee the lender can charge to pull the credit of a borrower. The fee is usually between $15 - $30 but varies depending on the state of the credit information and provider. Some lenders may not even charge this fee, but others do, so it’s best to have the conversation up front so you can anticipate the total costs of your real estate purchase.
Flood certification fee – Most lenders are going to require this to ensure the property is not in a flood zone. This fee can vary depending on location, property size, and terrain challenges if needed, but most residential transactions have this cost below $200.