Home buyers might end up paying more than expected with hidden administrative fees realtors have begun adding on.
- When purchasing a home, buyers are subject to many fees that raise the overall payment, but one newer fee is frustrating buyers.
- These administrative or transaction fees may cost buyers up to $1,000.
- Brokerages often charge this fee to cover any extra expenses that may arise while processing the paperwork, but with little oversight, there is plenty of room for abuse.
- While proponents of this fee argue that adding it to agents’ commissions helps brokerages stay in business, others argue that it is an overt cash grab.
Why it’s news
Buying a home already comes with a long list of expenses, and home buyers will look to cut any costs they can. Seemingly arbitrary fees like the administration fee can be frustrating for customers, yet more brokerages are embracing added fees.
It is difficult to determine exactly how many of these firms are adding fees since these statements are not in the public record, but more real estate agents are reporting seeing them in clients’ paperwork. The National Association of Realtors (NAR) told Insider that “many real estate brokerages charge an administrative fee to help offset costs.”
Home buyers are facing more costs than in years past as home prices remain high. Many are making smaller down payments with larger monthly mortgage payments for smaller houses. While the admin fee may seem small in comparison to expenses buyers have to deal with, in an expensive market, every little bit matters.
Admin fees are nothing new, but they have become more common in the housing market since the housing bubble burst in 2008, Insider reports. Brokerages were struggling to survive the drop in revenue and began charging extra fees to pad profits. In recent months, the admin fee has only grown.
For many buyers, these fees go unnoticed in the piles of paperwork they have to complete. It is a simple way for brokerages to make a few hundred extra dollars. These fees are technically negotiable, but if the client never notices the relatively small fee, he will never have the opportunity to challenge it, Insider reports.