Homebuying has a junk fees problem

Real estate junk fees are quietly adding hundreds of dollars to out-of-pocket expenses for homebuyers and sellers at closing.

The charges are disguised under names like “administrative,” “document storage,” or “regulatory compliance” fees and typically range from $425 to $495.

However, the think tank Consumer Policy Center has found it exceeds $1,000 now. Buyers and sellers collectively pay nearly $2 billion annually in these fees.

The hidden costs
Unlike expenses rolled into a 30-year mortgage, closing fees must be paid upfront. This can put extra pressure on buyers already stretching their budgets to afford a home.

A typical US house now costs more than $400,000.

Industry insiders say real estate agents use these fees to offset higher commission splits paid to brokerages. However, consumer advocates stress that buyers and sellers can negotiate the charges.

Homebuyers can often get these fees waived or ask sellers to cover them. Challenging questionable charges early in the transaction can help buyers avoid unnecessary expenses and reduce the financial burden of closing on a home.