Complete Guide To Real Estate Fees

Understanding all of the fees associated with a real estate transaction can help ensure that you have the money that you need in order to hold up your end of the deal.

If you’ve never been involved in a real estate transaction, you may think that the only fee associated with the transaction is when the person who want to buy the property pays the person who is selling the property. However, that’s simply not the case. Real estate transactions are lengthy, legal processes that involve the movement of a lot of money. Understanding all of the fees associated with a real estate transaction can help ensure that you have the money that you need in order to hold up your end of the deal. Whether you’re buying or selling, it’s crucial that you have the money that you need in order to legally perform your contractual tasks.

Mortgage Fees

Unless you pay cash for a home, you will need to obtain a mortgage in order to buy a home. What you may not have realized is that there are fees that you are responsible for on top of the monthly mortgage payments. There are loan origination fees, credit report fees, application fees, document preparation fees, recording fees and title insurance fees. The cost of these additional fees will vary between states and even between lenders. As the person applying for the loan, you will be responsible for these costs and you should budget accordingly. 

Agent Commission

Lawyers generally say that “the person who defends himself in court defends a fool.” While that may sound harsh, the same could be said about real estate transactions. Whether you’re buying or selling a home, working with a professionally licensed real estate agent is a good idea. This agent, who knows the ins and outs of your state’s real estate laws helps ensure that your transaction goes through legally and as quickly as possible.

However, these agents don’t work for free. If you’re selling a home, the listing agent will charge you a commission that he or she receives when the home sells. Let’s assume that your listing agent charges a 6% commission. If you sell your home for $250,000, the listing agent will receive $15,000 upon closing. If you’re purchasing a home, you should work with a realtor as well. However, in virtually every case, you aren’t responsible for paying that agent. Instead, he or she receives a portion of the selling agent’s commission. If the listing agent finds a buyer on their own, they get to keep the full commission.


Before you purchase a home, it’s important that you have a professional inspection performed on the property. While you may be able to walk through a property and see certain obvious defects (often referred to as latent defects), there may be hidden issues with a property. This inspection can be paid for by the buyer or seller. The purchase contract usually determines who pays for the inspection, but in most cases, it falls on the buyer. Inspection costs vary between inspectors.

Staging and Prep Fees

Obviously, this cost is handled by the person selling the home. If you’ve already purchased a new home and moved in, your listing agent may tell you that it’s easier to sell a home that is staged and decorated. This cost can range anywhere between a few hundred dollars and a few thousand dollars depending on the company that you employ to stage your home.

Closing Costs

This is the fee that most people don’t think about when they’re working out their budget for finalizing a real estate transaction. Closing costs cover a variety of aspects of a finalized transaction.

  • Title search
  • Appraisal fees
  • Deed recording fees
  • Survey taxes
  • Prorated property taxes
  • Credit report changes

The closing costs on a property generally cost between 1% and 3% of the final purchase price of the property. That means that if you’re involved in a $250,000 real estate transaction, the closing costs will probably be somewhere between $2,500 and $7,500. These fees may be evenly split between the buyer and seller, or one party may agree to pay all of the closing costs to sweeten the deal for the other party. 

Seller Concessions

There may be some parts of the property that need to be repaired or updated. Let’s say that you’re purchasing a home that has outdated plumbing. The agent who represents you may write up your offer on the property and make it contingent on the seller offering concessions necessary to upgrade the plumbing system in the home. These concessions can be subtracted from the final purchase price or they may come in the form of a check from the seller to the buyer. 

Overlap Fees

In most cases, there will be a transitional period between selling a home and moving into a new one. If you haven’t closed on your next home when you close on the one that you’re selling, you will have to figure out where you’re going to live during the transitional period. While you may be able to get the seller to wait on moving into the home that they just bought from you, that’s highly unlikely since they don’t want to pay for a home that they aren’t living in. Experts say that transitional costs (temporary housing and storage fees for your furniture and belongings) generally cost around 1% of the amount that you received for the home you just sold.

Knowing about the hidden fees associated with a real estate transaction is a vital part of making sure that you have the funds that you need in order to close the deal. Whether you’re buying or selling a home, there will be fees that you are responsible for. Make sure that you talk to your mortgage lender and your real estate agent to get a better understanding of how much those fees usually cost in your area.


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