Are Sneaky Admin Fees at Closing Legal?
One of the most frustrating things that can happen in a real estate transaction is discovering a surprise charge days before closing. Recently, a buyer reached out, confused and angry after their agent attempted to add a $500 administrative or processing fee via an unexpected addendum. This was never part of the original buyer’s agency agreement and came completely out of the blue.
Unfortunately, these situations are becoming more common. Some brokerages tack on administrative or processing fees at the last minute, often calling them transaction fees. The real issue arises when these charges were never agreed to in writing earlier in the process. In this case, the buyer had a signed contract that clearly stated the seller’s agent would pay their commission. No mention of a $500 fee. So why was this being added just days before closing?
What Are These Fees and Are They Legal?
Transaction fees, administrative fees, or processing fees are often added by brokerages to cover internal costs, like compliance review or document processing. Some real estate agents pass these along to clients. But here’s the critical point: these fees must be disclosed up front. If they are not included in your buyer’s representation agreement or the listing contract, then they are not enforceable.
This fee is often referred to as a junk fee. And when it’s added after negotiations are complete and right before closing, it is not only unethical, it might also be a violation of Code of Ethics of the National Association of Realtors.
What Should You Do If This Happens to You?
If a surprise fee shows up in the final documents or you are asked to sign a new agreement close to closing, you are well within your rights to push back. You should politely but firmly decline to sign the addendum. Make it clear that you do not agree to pay a fee that was never disclosed or negotiated.
Next, review your signed buyer agency agreement or listing agreement. If the fee is not listed there, the agent cannot simply add it later. If they insist, reach out to their broker directly. If necessary, contact your title company and instruct them not to include the fee in your final settlement statement.
And finally, consider filing a complaint with your state’s real estate commission or local association of Realtors if you feel the situation was handled unethically.
The Right Way to Handle Real Estate Fees
It is not unusual for a brokerage to charge a small administrative fee. What is unusual and unacceptable is failing to disclose it. These charges should be in writing and explained clearly before you enter into any agreement. Real estate is a professional service, and transparency is key to maintaining trust.
A good real estate agent will never spring a fee on you at the last minute. If they made a mistake and forgot to include it in your agreement, that is on them. Ethical agents will cover that cost themselves rather than putting the deal or your trust at risk.
Final Thoughts
Real estate transactions are too important to leave room for surprises. Always review your contracts thoroughly. Ask direct questions about fees. Do not be afraid to say no if something does not feel right. And most importantly, work with professionals who put honesty and communication first.
If you are buying or selling a home and want to work with a real estate professional who will be upfront and transparent about fees, I can help. I will connect you with a vetted agent in your area who will advocate for your interests and ensure there are no surprises at closing.
