Two cats, one dog, one boyfriend and one bedroom.Kelly MacDonald was ready to move out from her small rental home in a Cincinnati suburb and buy her own place.She met a real estate agent at a backyard party earlier this year ready to help.
MacDonald figured she could trust her since they met through a friend.Still, she did not fully let her guard down.Since her mom works in commercial real estate, MacDonald had her mother look over the contract for working with the new agent."She would sniff out bad vibes or things that might be weird," MacDonald thought.Her mom did spot something: A strange $425 fee the agent had tacked on to the contract.Wanting to know more, MacDonald turned to where she usually starts her research: Reddit.
And soon, commenters had a warning for her: This is a junk fee.Now, a $425 fee is just a fraction of a percent of the total cost of buying a typical home in the U.S, which can often be north of $400,000.But fees like this are due at closing, meaning they aren't spread over a 30 year-mortgage — they are an immediate out-of-pocket expense, which can sting homebuyers barely able to put enough money to cover their costs when they get the keys.These fees come with different names and explanations, such as document storage fees and administrative fees.And while they have been around for decades, they are spreading, including now often being charged to both home buyers and sellers.
Both are collectively paying nearly $2 billion in these fees a year, according to new research from the think tank Consumer Policy Center, which called that estimate conservative."It's been growing for so long," said Wendy Gilch, a fellow at the Consumer Policy Center who co-authored the report."Consumers didn't really ask what it was for, or were told it was their cost," she adds."And we're finding out that's not really the case."In the actual contracts between consumer and agent, these fees go by different names and come with different justification — from regula...