A Comprehensive Guide to Escrow Fees: What Buyers and Sellers Need to Know
When you’re in the process of buying or selling a property, understanding the various costs involved is crucial. Among these costs, escrow fees often cause confusion. Many people are unsure about what these fees cover, who is responsible for paying them, and how much they will amount to. In this blog, we’ll break down everything you need to know about escrow fees to help you feel confident and informed throughout the closing process.
What Are Escrow Fees and Who Pays Them?
Escrow fees are an essential part of the real estate transaction process, but many buyers and sellers may not fully understand their purpose. Simply put, escrow fees are paid to a title company or an attorney responsible for managing the closing of a property sale. This fee covers the services provided by the escrow agent, who acts as a neutral third party to ensure that the terms of the sale are met by both buyer and seller before the property and funds change hands.
Determining Responsibility for Escrow Fees
In California, who pays the escrow fees can vary by county and even by specific agreements made during the negotiation process. Typically, the responsibility for paying escrow fees can be shared between the buyer and seller, or one party may bear the entire cost. To know for sure who is responsible for these fees in your transaction, it’s best to consult with your Realtor, attorney, or escrow officer.
Breaking Down the Cost of Escrow Fees
Escrow fees can vary depending on the company or attorney you work with, but it’s important to have a general understanding of what to expect. Here’s a typical breakdown of escrow fees you might encounter:
Standard Escrow Fees
- Buyer and Seller Base Fee: $250.00 plus $2.00 per thousand of the sales price. The minimum escrow fee is usually around $795.00.
- Loan Tie-In Fee: $395.00 to the buyer, which includes an in-house notary service.
- Document Fee: $100.00 charged to the buyer.
- Delivery Fee: $75.00 to the buyer, if applicable.
Additional Fees (If Applicable)
- Document Preparation Fees: $75.00 for documents like Quitclaim Deeds or Power of Attorney.
- Demand Fee: $50.00 to the seller for each demand, if applicable.
- Wire Fee: $30.00 to the seller, if applicable.
- Exchange Tie-In Fee: $150.00 for parties involved in a property exchange.
- Notary Fee: $150.00 to the seller, if applicable.
- Debt Payoff Fee: $50.00 per debt, if applicable.
- Processing Fee for Seller Withholding: $45.00, if applicable.
Understanding the Variability of Fees
Not all of these fees will apply to every transaction. For example, if there are no debts to be paid off, you won’t incur a debt payoff fee. Similarly, if no documents require special preparation, those fees won’t apply. Before closing, Neighborhood Escrow will provide a detailed outline of all escrow fees specific to your transaction, ensuring there are no surprises when it comes time to settle.
How to Get Clarity on Your Escrow Fees
Escrow fees can feel overwhelming, but they don’t have to be a mystery. The best way to get clarity on what fees will apply to your situation is to discuss them with your Realtor, attorney, or escrow officer early in the process. These professionals can provide you with a clear understanding of what to expect based on your unique transaction.
