Across the country, homebuyers are encountering a previously unanticipated charge: junk fees. These charges can exceed $1,000 per transaction, come due at closing, and are frequently concealed within lengthy paperwork. Buyers who are already struggling to cover their down payments and inspections face these fees as a direct, immediate expense.
These charges go by various titles and justifications, including document storage fees and administrative fees. The report’s writers characterize the estimate as cautious, with both buyers and sellers together footing a combined bill of nearly $2 billion annually for these charges.
The fee that Kelly MacDonald found
Kelly MacDonald wanted to leave her small Cincinnati suburb rental behind. She connected with a real estate agent at a backyard gathering and had her mother, who works in commercial real estate, check over the contract.
Her mother spotted a strange $425 fee the agent had tacked on. MacDonald turned to Reddit for advice, and commenters warned her: This is a junk fee.
Why the fee stings
A $425 fee is a small fraction of the cost of buying a typical home in the U.S., which can often be north of $400,000. But the fee is due at closing, not spread over a 30-year mortgage.
That lump sum can add up to a great deal for home buyers who are piecing together both a down payment and the cost of an inspection.
Agents call them money grabs
April Green, a real estate agent in South Florida, uses a harsh term to describe these fees. She calls them money grabs.
“I’ve experienced it and I think they’re crap,” Green said.
Often earning more than $10,000, Green receives a share of commissions from home sales, which she generally splits with her brokerage. She said requesting additional fees feels greedy to her.
How the fees spread
For years, the Consumer Policy Center has noted that these charges have existed for decades, though they are becoming more widespread. Today, they are frequently imposed on both buyers and sellers alike.
Brokerages sometimes attract agents by giving them more favorable shares of commission income, then recoup that money through charges made directly against clients. Some agents absorb those costs personally instead of passing them on.
Fees are not always disclosed
The Consumer Policy Center’s fellow Wendy Gilch, who co-authored the report, noted that these fees often come attached without adequate warning, frequently surfacing just days or even hours prior to closing.
A real estate agent friend of Gilch’s told him years ago that they didn’t have such fees in her area, when she was working in Dallas.
“And now they do.”
What buyers can do
Gilch tells buyers and sellers to watch for admin fees listed in the contract, noting that these charges frequently appear under other names. Her view is that agents will usually give ground on those fees because the far larger commission they stand to earn from the sale — often a five-figure sum for a typical house — makes the smaller fee worth protecting rather than fighting over.
The Florida lawsuit
This year, purchasers of property in Florida brought legal action against the real estate agency Compass, saying the firm had added transaction fees to their agreements without proper authorization. Those plaintiffs later abandoned the suit on their own, and the matter was then resolved.
Compass did not respond to NPR’s request for comment.
NPR received an email from the National Association of Realtors, which represents both agents and brokers, stating that its members are required to “act in the best interests of their clients. This includes explaining and disclosing all contracts related to the transaction in clear and understandable language and avoiding the misrepresentation of pertinent facts.”.
What MacDonald did
The house MacDonald bought has five bedrooms, a fireplace, and a large yard for her dog. It sits on a quiet corner, and she paid $445,000.
“Had to work hard for it,” she said while looking at her new front porch.
The first contract’s $425 fee was never paid by her. She asked the home seller to take on that cost instead, and she pushed for that arrangement throughout the entire process.
“I kind of feel guilty they paid for it,” MacDonald said. “I think the realtor should have paid for it.”
The takeaway
Real fees are being charged, and they are growing in number. Buyers should study their contracts closely and resist when they spot these charges.
Gilch noted that these charges now show up in nearly every house sale, and they’ve risen so far that they can easily add more than $1,000 beyond what was expected at closing.
Some people can manage it. Others find it a heavy expense.
Attention to detail pays off. When purchasers spot these charges and push back against them, they frequently discover that agents are willing to give them up.
The dismissal of the case against Compass brought the matter to an end. Still, the practice remains unaltered.
Here is how buyers can protect themselves:
- Read the contract carefully, looking for admin fees, document storage fees, or other charges that seem unusual.
- Challenge the fees with the agent — the agent’s commission is often large enough that they are willing to drop the charge.
- Consider negotiating with the seller to cover the fee instead of paying it yourself.
Many sellers apply it routinely, though those who spot it frequently find they can get it dropped when they speak up about it.
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