Sneaky Fees on your Closing Statement!
Posted Apr 7, 2007 @ 11:04 am, Viewed by 599 Visitors, Read 611 Times.
I have experienced a few surprises at the closing table recently and I thought I might blog about it here on this website. It seems that a new trend in real estate is hidden fees at closing.
Usually for a new home here in Englewood, Florida there is a commission of 6-7% that is generally split evenly between the buying agent and the selling agent. This commission is evidently just not enough for some real estate companies as they have decided to charge their customers an extra $250 to $400 “Documentation Fee” or “Transaction Fee.” This fee will show up whether you are buying or selling with these agencies, and if you use that same agent to both buy and sell your property, you can get hit with the fee twice!
When asked to explain this new fee, your agent will normally tell you it is for preparation and storage of your closing documents. If this is the case, what is the rest of the commission for? On an average 250k dollar home the commission before splits can be as high as $17,500.00. Is this not enough money to prepare and store your documents? You would think that surely they could pay their document storage fee out of this commission. How much does it cost to store a folder of paper nowadays?
Don’t blame the individual agents though…well not too much at least. The only mistake the agents are making is working for a company with policies like this. In my experience if the buyer or seller refuses to pay the “documentation fee,” the broker will take it out of the poor agent’s commission.
I urge everyone to ask their agent up front what their fees will be so that we can get this nasty trend stopped before it gains too much of a foothold. PROGRAM Realty never has and never will charge any of these ridiculous fees to our buyers or sellers! Our only fees come from the percentage commission that is pre agreed upon when the listing is made and is paid only by the seller in a transaction.
Usually for a new home here in Englewood, Florida there is a commission of 6-7% that is generally split evenly between the buying agent and the selling agent. This commission is evidently just not enough for some real estate companies as they have decided to charge their customers an extra $250 to $400 “Documentation Fee” or “Transaction Fee.” This fee will show up whether you are buying or selling with these agencies, and if you use that same agent to both buy and sell your property, you can get hit with the fee twice!
When asked to explain this new fee, your agent will normally tell you it is for preparation and storage of your closing documents. If this is the case, what is the rest of the commission for? On an average 250k dollar home the commission before splits can be as high as $17,500.00. Is this not enough money to prepare and store your documents? You would think that surely they could pay their document storage fee out of this commission. How much does it cost to store a folder of paper nowadays?
Don’t blame the individual agents though…well not too much at least. The only mistake the agents are making is working for a company with policies like this. In my experience if the buyer or seller refuses to pay the “documentation fee,” the broker will take it out of the poor agent’s commission.
I urge everyone to ask their agent up front what their fees will be so that we can get this nasty trend stopped before it gains too much of a foothold. PROGRAM Realty never has and never will charge any of these ridiculous fees to our buyers or sellers! Our only fees come from the percentage commission that is pre agreed upon when the listing is made and is paid only by the seller in a transaction.
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When I was with Coldwell Banker (CB) in the past (no longer so), we had fees like this that needed to be paid directly to CB by the customer. It's rather absurd to think that CB collected additional fees on top of the commission split that they already take from their agents, and even worse that CB passed it off onto their agents to explain it away to customers - agents should not be put in situations like that. Myself and fellow agents would simply pay the fee for our customers and not spend too much time on the item, in essence, giving CB a further commission split. CB should have increased their commission split directly to agents and abandoned the idea of having their agents try to pass some fee off to customers.