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What Is an Acquisition Fee?

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  • Written By: Keith Koons
  • Edited By: C. Wilborn
  • Last Modified Date: 16 March 2014
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    Conjecture Corporation
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An acquisition fee is an added cost that consumers must pay in order to make certain types of purchases. Many investment firms, for example, charge an acquisition fee for clients to participate in their programs. In real estate, an acquisition fee normally refers to the percentages that realtors, lawyers, and title companies charge for the services that are rendered. Other types of businesses charge an acquisition fee to open a new account, apply for a line of credit, or to gain the privilege to conduct business with them.

For hundreds of years, financial institutions have realized that no investment is certain to produce profits 100% of the time. Since there was a chance that they could lose money by helping a client, many banks decided to charge clients an upfront fee to ensure that the transaction was profitable. This varied amount is called an acquisition fee, and charged on every transaction, regardless if the consumer was making a deposit or a withdrawal. Many stock brokers still charge an acquisition fee on preferred accounts that offer additional benefits to investors.

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Within the real estate world, an acquisition fee refers to the commission that each entity collects during the sale of property. Since consumers normally can not afford to pay a lot of money up front for inspections, realtors, and title searches, these bills are normally paid in a commission once the sale finalizes. Both the buyer and the seller would be responsible for covering the various acquisition fees unless it was otherwise stipulated within the contract. When the market is particularly favors either the buyer or the seller, these fees are often negotiated before the closing date.

In other cases, an acquisition fee is charged by businesses that ship products by mail. The fee itself is not actually for any type of service or product; instead, it is charged simply because it is a creative way for the business to make extra profit. While this charge is normally referred to as shipping and handling, it is often higher than what it cost the business to package and ship the item.

Many other types of businesses charge an acquisition fee as well. Credit card companies may require an upfront charge for activating service, and it may be defined as an acquisition, activation, or service fee. Membership clubs basically do the same thing by charging consumers an annual fee that allows them to conduct business at that location. Some specialty businesses may also charge an acquisition fee when rare or valuable items are bought on behalf of a customer.

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