First-time homebuyers are adamant about saving every penny for a down payment but new research from Clever Real Estate, a St. Louis based real estate company, shows homebuyers spend an average of $31,975 on additional home buying expenses such as closing costs, repairs, and moving.
The expenses weighing on homebuyers' budgets include:
- Repairs and renovations: $13,498
- Furniture, fixtures, and appliances: $6,446
- Closing costs: $4,754
- Concessions to seller: $3,943
- Moving costs: $2,670
- Private mortgage insurance: $387 (annually)
- Home inspection: $277
An average-priced U.S. home amounts to $501,500, according to Clever Real Estate data, so a 15% down payment would cost $75,255, bringing the total upfront cost to a whopping $107,230. It's no wonder that 48% of buyers said costs were higher than expected, with 39% exceeding their budget and 38% reporting impacts on their savings.
Age and experience also factored into how much homebuyers spent on upfront costs. Researchers noted 63% of first-time buyers were surprised by the cost. Among Gen Zers, 49% exceeded their budget — over 1.5 times more than Baby Boomers (31%).
Given the unaffordable market and lack of inventory, many homebuyers are undoubtedly feeling pressure to compromise – on anything but their budget. Nearly 80% of buyers compromised on at least one priority. Still, of the 57% who prioritized their budget, more than one in 10 (11%) went over their limit.
Researchers found that market competition is dwindling down, with more than half of home buyers (52%) negotiating with the seller, and 94% of those who did so achieving success. Furthermore, about 34% of buyers paid below the asking price in 2024, up from 27% in 2022, when the market was more favorable to sellers.
Overspending has made some homebuyers remorseful. About 72% of buyers said they have regrets, with the most common regret cited that buying a home is too expensive. Had buyers known the true cost of purchasing a home, 68% said they would have taken a different approach, believing they could have saved an average of $24,000.
Following the National Association of Realtors' (NAR) settlement in August, researchers noted that buyers may pay an additional $12,944 in commission costs on the average-priced home if sellers decide not to pay the buyer's agent. In 2024, 66% of buyers with agents had their commissions covered by sellers, but that is no longer required.
