What are Escrow Fees?

N. Madison
N. Madison

Escrow fees are charges an escrow business sets for its services. These fees are typically charged to cover the expenses the escrow company has as part of running a business, including overhead costs, and providing escrow services. Escrow fees may also be based on the liability the escrow service takes on as part of providing its services. In most places, escrow service fees are not regulated by any kind of government authority, which means these fees may vary from escrow service to escrow service. The average escrow fee may also vary based on the country in which services are provided, the amount of money involved in the transaction, and the type of transaction.

Escrow fees are most commonly paid by the buyer in a real estate transaction.
Escrow fees are most commonly paid by the buyer in a real estate transaction.

An escrow service is a company that acts as a middleman for transactions between two parties. When an escrow service is used in a transaction, a buyer doesn't give the money for the purchase of a product or service directly to the seller. Instead, the buyer gives his money to an escrow service to hold until the transaction is completed successfully. Essentially, this type of service is used as a safety mechanism to ensure that a transaction goes smoothly, the buyer gets the product or service he is expecting, and the seller gets the right amount of funds. An escrow service can be used in just about any type of transaction, but they are most commonly used in transactions that total $500 US dollars (USD) or more.

Closing costs on a home include escrow costs.
Closing costs on a home include escrow costs.

Since escrow fees vary from company to company, an individual who needs to use such a service may request fee schedule information and compare prices before choosing a service. Often, an escrow service charges fees according the minimums listed on its schedule. In some cases, however, the fees a party is charged may be more than the amount listed on the schedule. This may occur, for example, when there are extra or special expenses related to a particular type of transaction. An escrow service should be upfront in discussing any additional fees with its customer so the person has an opportunity to change his mind before the transaction is already in progress.

When an escrow service is used, the parties involved in the transactions have to decide who will be responsible for the payment of escrow fees. This is usually part of the negotiations of the transaction. The buyer or seller can agree to pay the fees, or the each party in the transaction may agree to pay a portion of the fees involved.

Escrow fees may be based on the liability the escrow service takes on as part of providing its services.
Escrow fees may be based on the liability the escrow service takes on as part of providing its services.
N. Madison
N. Madison

Nicole’s thirst for knowledge inspired her to become a wiseGEEK writer, and she focuses primarily on topics such as homeschooling, parenting, health, science, and business. When not writing or spending time with her four children, Nicole enjoys reading, camping, and going to the beach.

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Discussion Comments


@fify-- I don't really agree with you. Even if there was such an agency, it wouldn't be able to regulate escrow fees because there are just too many different types of escrow services and the fees vary for all of them.

I do think that there is a natural regulation in the system though. Since the activity of escrow businesses are very transparent and both parties to a transaction know about the fees, the businesses make sure to set fees at acceptable rates to their customers.

So I don't think that escrow businesses can overcharge their customers so easily.


How right is it for escrow fees to not be regulated by the government at all? Won't this allow escrow businesses to overcharge for their services?

And if the same types of escrow businesses were to the same, people would have no choice but to pay these fees because they need these services.

I don't think that's very fair. There should be some type of regulation to make sure that escrow businesses are not overcharging. I think it would be in their benefit too because a regulatory agency could make sure that they escrow businesses are not underpaid as well.

What do you think?


Real estate agents also provide escrow services and charge fees. We bought a house recently through a real estate agent and we paid a certain percentage to the agent for being the middleman between us and the seller.

The agent took care of the paperwork and was also the point of contact between the two parties. We paid part of the fees when we began the buying process and the rest of the fees when everything was finalized.

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