Westcoe Realtors, Riverside California…So…today, let’s bring the subject of escrow fees and costs out of the fog enshrouded mystery where they seem to dwell, and shed a little light on this area of a real estate transaction. Many times, the escrow company used for the sale of a home is an after thought to both the buyer and seller…but it shouldn’t be, since you (the buyer or seller) are footing the bill for this “after-thought”.
However, getting cost comparisons from escrow company to escrow company can be like trying to get the chicken recipe from Colonel Sanders…until now. Maybe we can help.
Bfore we begin, please note that the subject of today’s blog is about fees, not the professionals themselves. A good escrow officer and staff is worth their weight in whatever you find valuable, so if any escrow people are reading this blog, relax. You are worth all you can get…we just think the buyer and seller should know what they are paying to get your wonderful service.
First, understand that the escrow fees charged by various escrow companies vary as much Lady Gaga’s clothes. There are no set fees, pricing standards, or add-on “extras” that limit what an escrow company can charge. In many ways, it is the last of the real estate “wild west” as to fee structure.
Secondly, re-read the above…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.
Ok…let us begin with the Base rate. Almost all escrow companies charge a base rate, and that is computed on the sales price of the property. At Westcoe Escrow, we charge $2 per thousand 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 boy 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. Also, even within Riverside, this rate can be all over the place…so if you are comparing fees, start with this base rate.
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. Think baggage and fuel charges for an airline, and potatoes and a salad at a steak house.
Anyway, at Westcoe, the add-ons for a seller are a $50 fee to draw/create the legal documents such as the grant deed, inter-spousal deed if applicable, etc. This is a flat fee, not $50 per document as we have seen some companies charge. We also 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 us a wire fee.
That’s it…that is all a seller would pay for our escrow services.
For a buyer, there is a $75 loan tie-in (for coordinating all that comes with the buyers new loan…if it is an all cash purchase, there is no loan-tie in fee), a $100 E-doc fee (e-docs are a pain in the a–, are hugely thick, require several sets, and used to be provided to escrow by the new lender…now they pass it on to escrow in many cases so the lender can save the cost of printing…if the lender gives us all the docs as they used to do, there is no e-doc fee charged), and the same $35 wire fee if applicable. Again, that is it.
Unfortunately, Westcoe Escrow is not the norm. We routinely see other escrow companies charge for notary fees, administration fees (what is that?), doc prep fees, additional check fees, processing fees, demand ordering fees, etc. We even had one escrow company try to charge for a mobile notary right there in the escrow office (they felt they did not have time to do it themselves). It is amazing what can happen when greed meets opportunity.
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 we 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.