During escrow, a neutral third party safely transfers funds and key paperwork related to the transaction between the buyer and the seller; this includes the buyer’s earnest money, real estate fees, loan fees, third-party payments, and your profits as the seller. In exchange for this service, the escrow company charges a fee. According to licensed escrow agent Martin Orefice from Rent to Own Labs, escrow fees typically cost between 1% to 2% of a home’s final sale price. For all the details on how much escrow costs, we spoke with Orefice as well as top Baton Rouge, Louisiana, real estate agent Tyler LaBauve. Here’s everything sellers need to know about escrow fees. Understanding what people mean when they say “escrow fees” can be difficult, especially because the escrow process involves many moving parts. Orefice explains what escrow fees encompass in plain English: “Escrow fees are part of closing costs that are directly paid to the escrow company that handles the closing and distributes funds to third parties involved in the transaction. Typically, escrow fees cover the distribution of funds, paperwork, mortgage origination fees, and other fees that are part of the real estate transaction. Closing costs such as insurance, attorney’s fees, and property taxes are escrow costs that are charged by third parties and are held in the escrow account until the escrow company distributes them. So, basically, you need to pay the entire fee to the escrow company, which eventually handles and distributes it to all the parties involved.”What are escrow fees?
