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Junk fees are seemingly everywhere, sometimes even when you're buying a house. NPR's Stephan Bisaha reports on one fee some real estate agents say homeowners should not pay.
STEPHAN BISAHA, BYLINE: Kelly MacDonald was ready to move on from her one-bedroom rental home in a Cincinnati suburb.
KELLY MACDONALD: You know, we have two cats, one dog, one boyfriend. Too many things in a small house.
BISAHA: Then MacDonald went to a backyard party and met a real estate agent ready to help her buy a bigger house. MacDonald figured she could trust her since they run in the same circles but did not completely let her guard down. Her mom works in commercial real estate. So when she got the contract for working with this new agent, she made sure Mom gave it a look.
MACDONALD: I was like, she would sniff out things that might be, like, weird.
BISAHA: And her mom did see something she thought was weird. The agent wanted to charge MacDonald a $425 brokerage fee.
MACDONALD: This $425 thing seemed strange. She mentioned that. She thought it was, like, an odd thing to have.
BISAHA: Now, 425 bucks, that is just a fraction of a percent of what it costs to buy the average home. But these fees are due at closing and can really sting when homebuyers are already scraping the bottom of their savings to cover closing costs. So before agreeing to pay, MacDonald wanted to learn more.
MACDONALD: So I decided to go to Reddit, which is where all my research starts.
BISAHA: That's where some commenters warned her this is a junk fee. In contracts, they're typically called admin fees or document storage fees. Real estate agent April Green in South Florida has another name for them - money grabs.
APRIL GREEN: I just see it. I've experienced it, and I think they're crap.
BISAHA: These fees are not new, but they are becoming more common. She says it's not just buyers getting charged these days but also home sellers. Green refuses to charge these fees but says she's seen other agents tack them on.
GREEN: They just put $495 or whatever. And it was just 'cause they could. And so I've had a bad taste in my mouth with the admin fees since then because what's it really for?
BISAHA: Kelly MacDonald also wanted to know what this fee was for, so she called up the agent charging her.
MACDONALD: And to - like, to confront her. Well, I was nice about it.
BISAHA: The agent apologized and said the company she works for requires she charge the fee. She also said it's industry standard. And in a way, these fees have spread so far, they pretty much are standard now. That's according to Wendy Gilch. She's a fellow at the think tank Consumer Policy Center and wrote a report about these fees.
WENDY GILCH: You know, I remember talking about these fees years ago. And I remember a friend of mine saying - she was a Dallas real estate agent - she said, oh, we don't have those here. And now they do.
BISAHA: Her report also says these fees have grown in size, in some cases to over a thousand dollars. And another problem Gilch found is that some agents are not disclosing these fees upfront and only adding them days or hours before closing.
GILCH: Which is totally inappropriate and not valid to do to a homebuyer.
BISAHA: The National Association of Realtors represents both agents and their bosses. The group told NPR its members are required to explain and disclose all transaction costs. To be clear, as long as that happens and you sign a contract saying you'll pay these fees, then you are on the hook. So Gilch's advice when you do see these fees - don't sign.
GILCH: 'Cause we also found that in putting pressure to the agent to say, hey, I'm not paying this fee, then at times the agent will cover it.
BISAHA: Kelly MacDonald did end up buying a five-bedroom home with a fireplace and a porch she's looking at while we talk.
MACDONALD: Yeah, that's my porch. (Laughter) Had to work hard for it. Stupid porch.
BISAHA: Stupid, she says, because of how much money she paid for it and the house - $445,000. Not included was that $425 fee from the first contract. Instead, she negotiated for the home seller to cover it.
MACDONALD: I kind of feel guilty that they paid for it. You know, I think the realtor should have paid for it.
BISAHA: It's also a fee that all these months later, she still doesn't know what it's actually for. Stephan Bisaha, NPR News. Transcript provided by NPR, Copyright NPR.
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