What Is a Transaction Fee and Who Pays It?
Of the many fees associated with buying a house, one that’s often overlooked is the transaction fee. While it’s not as pricey as the commission, the transaction fee is a notable chunk of change that must be paid by either the buyer or the seller to offset the costs of processing paperwork.
What is a transaction fee?
Also known as “broker service fees” or “administrative fees,” transaction fees are costs associated with closing a real estate deal, says Mike Higgins, an agent with the Caleb Hayes Real Estate Group in Green Bay, WI.
This fee covers the cost of things like document storage and management.
“A transaction fee is an amount that a brokerage will charge to each transaction regardless of who pays it,” Higgins explains. “It is up to the agent themselves to charge that on to their customers.”
If they don’t, they’ll have to pay it themselves, and it will likely be taken out of the commission they’ve negotiated with a client.
In other words, the seller’s agent pays her broker the transaction fee, says Paul Margerie, a real estate attorney from Elm Grove, WI. But that’s rarely the end of it. The seller’s agent will typically bill the seller in order to recoup the costs, meaning the seller ultimately pays that fee. And the fee can be significant—anywhere from $295 to $625, depending on where you live.
It’s simple enough, right? Well, there are other fees with similar names that might be paid by either party, and both sellers and buyers need to be aware of them.