First, understand that the escrow fees charged by various escrow companies various. There are no set fees, pricing standards, or add-on “extras” that limit what an escrow company can charge
MANY ESCROW COMPANIES CHARGE WHAT THEY DO BECAUSE THEY CAN. Hate to make it sound that greedy, but when we in the industry see escrow fees on the same property run, for example, from $600 to $1,500, it even blows us away.
Let's begin with the Base rate. Almost all escrow companies charge a base rate, and that is computed on the sales price of the property. The company I use charges $2 per $1,000 of the sales price, plus $200. Therefore, for a $250,000 sales price, the base rate paid by both the buyer and the seller would be $250 x $2 plus $200….for a total of $700. Notice I say both, because this base rate, on 99% of all sales, is charged to both parties…$1,400 to the escrow company split 50/50 by the buyer and seller.
So, the first thing you check out with an escrow company is the base rate…and that can it vary from company to company and town to town. Our experience is that escrow companies in Orange County or parts of Los Angeles County are charging base rates almost double from above…for the same service.
Now comes the “add-ons.” Add-ons, in some cases, truly represent additional work for the escrow staff, and are a legitimate fee. However, we have noticed a trend in our industry that some escrow companies are charging for everything under the sun…almost to the point that we wonder what the base rate is. It can get a little crazy, but it allows an escrow company to keep the base rate down.
The add-ons for a seller, I would think are around $50 this is a flat fee (is a fair fee), to draw/create the legal documents such as the grant deed, inter-spousal deed, etc (if they are applicable). Plus they charge a $35 wire fee if applicable (seller has the proceeds wired to a particular account instead of receiving a check at the close)…and that is only because the bank charges them a wire fee.
That’s it…that is all a seller should pay for escrow services. (just my opinion)
Unfortunately, that is not the end for most escrow companies. I have routinely seen other escrow companies charge for notary fees, administration fees (what is that?), doc prep fees, additional check fees, processing fees, demand ordering fees, etc.
So…if you are a seller or buyer, what to do?
Simple…have your escrow company itemize the base rate, the add-on fees, and anything else they may charge for (UPS or Fed-ex charges are normal if they occur, but should be just for the cost of the delivery, and not inflated for the escrow company to make a few bucks). Get it in writing, and then if the costs are any different at the close, refuse to pay.
If you are represented by an agent in your transaction, they should do this for you. Most real estate agents have developed relationships with certain escrow officers over the years, and it is natural for them to want to use an officer that they trust…but be careful here. It is one thing to pay a little more for what your agent deems is professional and trustworthy service…but not at two to three times the cost.
In the end, the escrow business is just like any other business…they are going to charge what they feel they are worth. That is fine. However, all I suggest is that you know up front what you are paying for, and get what you expect. If that happens, then all is well, and you can finish your sale on a high note…and that is all anyone really wants in the sale of their property.
Take care, hopes this helps with any escrow fee questions you may have, and thanks for reading.