When you’re buying a home, you know that you’re on the hook for certain closing costs, including plenty of fees. But there’s one lesser-known fee that, as a buyer, you should be aware of before you purchase a home — private transfer fees.
So what, exactly, are private transfer fees, and what kind of cost could they add to your home purchase?
A recent article from realtor.com answered common questions about private transfer fees, including:
- What are private transfer fees? A private transfer fee is a fee that (depending on the situation) developers, homeowners associations, or individuals need to pay whenever a property changes ownership. Private transfer fees are either a flat fee, or a percentage of the sales price. While it’s typically paid by the seller, in certain situations, private transfer fees may be included in the buyer’s closing costs.
- How common are private transfer fees? Thanks to changes in real estate laws and regulations, private transfer fees are less common than they used to be, but they certainly still exist. According to the article, these fees may be minor (like the $2 flat fee charged in Arizona) or more substantial (like 4% of the total sale price, which is the norm in Delaware.)
- As a buyer, how can you find out about transfer fees? Even though transfer fees are less common than they used to be, it’s important to know if a home you’re considering buying has a private transfer fee, and how much that fee is. You can find out information about any transfer fees in either the sales disclosures, or the title report, where it would be listed as a covenant against the home.