If you are in the process of purchasing a home, you will likely encounter a charge called a settlement fee or escrow fee when reviewing your closing disclosure paperwork. But what exactly does this fee cover?
What is a Settlement fee for title?
A settlement fee refers to the administrative charges assessed by the settlement agent or title company for overseeing and facilitating the real estate transaction. This covers their time and services handling the extensive settlement procedures and paperwork.
Typical Settlement Fee Services Include:
- Preparing / collecting all legal documents like deed, title documents and transfer forms
- Coordinating signing appointments and witnessing document execution
- Collecting all closing funds from different parties
- Disbursing final sale proceeds to the seller and paying any 3rd parties
- Recording the deed transfer and mortgage documents
- Preparing and distributing the completed closing packages
In essence, the settlement fee is the charge for the settlement agent’s work and expertise in administering the many intricate steps that comprise the property sale, mortgage financing, and legal conveyance.
Who Pays the Title Settlement Fee?
The settlement fee is typically paid by the buyer as a part of their closing costs. An common exception is in a cash deal, when no lender is involved, the buyer and seller will split the fee. However, it may also vary based on the specific contract terms. The buyer’s portion of the settlement fee (and seller’s portion, if any) will be shown separately on closing disclosures.
On the buyer side, the settlement fee is one of the closing costs required from the purchaser at closing. (See the entire list of closing costs for buyers) Their section of the fee may be called a settlement or closing fee.
For sellers, the settlement fee is deducted from sale proceeds at closing.
In addition to base settlement fees, other charges for specific settlement-related services like courier fees, wire fees, and overnight delivery may also be incurred depending on the transaction.
What is the Average Settlement Cost?
On average, for a $300,000 purchase, a buyer can expect to pay a $1850.00 settlement fee. If the purchase is cash, with no lender, the buyer and seller will split this fee equally.
The amount of your fee can range based on factors like:
- Location – Larger metro areas may have higher rates.
- Property type – More complex commercial or multi-family transactions cost more.
- Purchase price – Fees on higher-priced homes may increase.
On average, in the Chicago metro area, expect a $1650 to $2500 settlement fee.
When you hire Adler & Herbach real estate attorney, to buy your house, you will get all the attorney services you need for just $750, a flat fee. No hidden fees are involved. Plus, you won’t be charged for an initial consultation. Contact Adler & Herbach at +1 (847) 318-3770.
In summary
The settlement fee compensates the title company or escrow agent for the considerable time and labor involved in properly settling your real estate transaction. Depending on the transaction, buyers and sellers may each be expected to pay a portion of these costs.
