Maybe it's been a long time since you bought or sold a house, or maybe this is your first time. Fees abound in the world of real estate, and most of them are shouldered by the buyer. That doesn't mean the seller gets a free pass, and some sellers opt to pay more in order to make a sale go off without a hitch. But either way, the whole topic of fees can be a confusing one.
If you're in the market, whether to buy or sell, here are the fees that you can expect to emerge throughout the process:
Which Fees are Paid By the Buyer
As the buyer of a new home, be prepared to keep that checkbook handy. Fees emerge seemingly every day throughout the process of a sale, and the buyer is expected to pay the vast majority of them. And it's not that these fees are hidden, says U.S. News & World Report Money. They're all above-board. The problem is that most people aren't aware of them until they get a bill or request for payment.
Many of the fees deal with the house itself, and that can surprise some buyers. For example, the home inspection and usually the appraisal, too, are paid for by the buyer. That's true, even though an appraisal is performed on behalf of the lender.
It's safest to work in a mindset that realizes for every piece of paper filled out, there's probably a fee associated with it. That's not always true, of course, but it is largely true.
The most common fees that sellers encounter include:
- Home inspection
- Appraisal
- Survey costs
- Property taxes
- Document recording
- Credit report
- Flood life-of-loan
- Tax service
- Title search
- Title insurance
- Loan origination
The most common fee paid by the buyer is the agent's commission.
Which Fees are the Responsibility of the Seller
Sellers are always responsible for paying the real estate agent's commission. That fee typically comes from the proceeds of the sale. But beyond that, fees can vary greatly. Most of them depend on the type of existing financing the seller has, and some fees vary by location. For example, if the seller's lender has a pre-pay penalty, then paying off the loan before a certain time results in a fee paid to the lender.
Other fees occur when there is a lien against the property. If a contractor has performed work that hasn't been paid for, there might be a lien against the property that must be paid when it is sold. And of course if there is no lien, there is no lien release fee.
Some sellers choose to pay fees on behalf of the buyer, says Realtor.com. In those cases, some of the fees that the buyer would ordinarily pay come from the buyer instead. It's a way to sweeten the deal and help a wavering buyer make a final commitment, or help a seller who is cash strapped complete the sale.
Some fees that buyers can expect or elect to pay:
- Taxes
- Prepayment penalty
- Loan payoff
- Termite letter
- Title search
- Notary services
- Document recording
- Lien release
It's never as simple as exchanging a check for the keys and deed to a house. An ordinary closing can take 30 to 60 days to arrive, and that's because of the volume of paperwork done behind the scenes. And throughout that process, whether you're a buyer or seller, the safest course of action is to expect that you'll pay at least some fees.
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