13 Real Estate Fees You’re Probably Paying Too Much For

This post may contain affiliate links.

It’s exciting to buy or sell a home, but it seems like every other step comes with another fee to pay. You may feel like you’ve been nickeled and dimed to the last penny when you sit down to sign the paperwork. This isn’t surprising—real estate transactions involve so many professionals, legalities, services, and there’s just so much that can happen that even a small oversight can end up costing you a lot. Also, most people don’t realize that many of these are negotiable or unnecessary.

In this guide, we’ll strip the layers back from the home buying and selling process in order to shed some light on some real estate fees you may be incurring that you don’t need to be. Here’s what you need to know about protecting your wallet during one of the most expensive financial transactions of your life from agent commissions to hidden charges in your closing documents.

Agent Commission Fees

13 Secrets Realtors Don’t Want You to Know — Photo Credit: Pexels

The big one—agent commissions, let’s start there. The real estate agent’s fee is normally 5-6 percent of the home’s sale price, which can quickly become thousands of dollars. Agents do a lot of legwork, however, this percentage is negotiable. There are some home sellers who have been able to get a lower commission or even find agents that work on a flat fee. Even if it makes you feel awkward, asking for a reduction can save you a lot.

Appraisal Fees

Before approval on a mortgage, lenders usually require an appraisal of the home to confirm that it’s worth what the mortgage is being applied for. Appraisal fees, however, are not set in stone. Appraisers have different rates, and some lenders will even waive this fee in competitive markets to get more buyers. Here you can ask about options which can save you from paying at the highest end of the range.

Mortgage Origination Fees

Lenders charge mortgage origination fees to process your loan application, and can run anywhere from 0.5% to 1% of the loan amount. Often these fees are negotiable, especially if you have a good credit score and a good financial history. Some lenders may be willing to lower this fee or even waive it altogether.

Courier and Delivery Fees

Many real estate transactions still include courier or delivery fees for paperwork — it may sound old fashioned. A lot of this can be done now through email or electronic signing platforms that can potentially save you these extra charges. It’s worth asking if the title company or attorney’s office can do things digitally to avoid paying a bunch of unnecessary fees.

Title Insurance

A title insurance protects the buyers from any disputes or claims about ownership that may take place after the sale. This is often necessary, but too many buyers overpay by not shopping around. A study by the Consumer Financial Protection Bureau (CFPB) found that some title insurance companies charge dramatically different rates for the same services. It’s worth taking the time to compare a few quotes to save yourself hundreds.

Escrow Fees

The third party handling the funds and paperwork throughout the transaction is paid for by escrow fees. The fees are usually split between the buyer and seller, but there’s some room for negotiation. If you’re willing to ask, many escrow companies offer discounts or reduced rates.

HOA Transfer Fees

"22 Common Gripes Homeowners Have with HOAs" — Image Credit: Pikwizard

If you’re buying a property in a community that has a homeowners’ association, or HOA, you might be charged a transfer fee. The fee covers the cost to update the HOA records and is frequently passed on to the buyer. But sometimes, HOA transfer fees are inflated, so you should ask to clarify what it is that you’re paying for, and whether it can be reduced.

Survey Fees

A survey may be required when buying a home to check property boundaries. Survey fees are unavoidable, though, it’s important to know that prices vary a ton between companies. Simply going with the first option that your agent gives you is enough to overpay. Here, doing a little research to compare rates can prevent unnecessary expenses.

Home Warranty Fees

"20 Everyday Rip-Offs Draining Americans’ Wallets" — Image Credit: Pikwizard

Home warranties cover repairs on major systems and appliances in your home. A warranty can give you peace of mind, but it’s usually optional. Many sellers will also cover the first year’s cost as a sweetener, and in many cases you can negotiate this as part of the deal. If it’s not covered, ask yourself, do you really need it or is it just a ‘nice to have.’

Recording Fees

Homeownership — Image Credit: OleksandrPidvalnyi/ pixabay

To make the transfer of ownership official, the county charges recording fees. According to the American Land Title Association, the fees are different by state and while they’re not usually negotiable, it’s good to know what you’re being charged for. There might be differences or charges that are unexpected. It can prevent any surprises if you double check.

Home Inspection Fees

Image Credit: RDNE Stock Project/ Pexels

A home inspection is an expense you don’t want to skip, but you may be overpaying. Depending on your area, some inspectors tack on extra charges for things like radon or termite testing that you may not even need. Do your homework to find a reputable inspector, and ask upfront if there are any add on fees. Most of what you should know can be covered by a basic inspection.

Closing Costs

The bundle of fees due when closing, such as lender fees, recording fees, and escrow costs, are the closing costs. They usually account for 2–5 percent of the home’s purchase price. However, most buyers don’t know that some of these costs are negotiable. That could mean you can try to negotiate with the seller to pay some of the closing costs or search for lenders that will offer a better deal on some of the fees associated with buying a home.

Attorney Fees

While hiring a real estate attorney is a must in some states, you don’t have to accept the first price you’re quoted. Fee structure of attorneys vary from some charging by the hour, some offering flat rates. Comparing several attorneys’ fees will help you to pay less than what you have to.

Disclaimer: This list is solely the author’s opinion based on research and publicly available information.