Service Fee
The definition of a service fee or brokers fee in real estate is a flat fee paid to a real estate agent or broker in addition to the commission for the sale or purchase. This is to cover the cost of several auxiliary services that the real estate agent or broker provides after the transaction has been completed between all parties.
The services provided vary but can include the procurance of title insurance, verifying that the title for the property is taken care of in a suitable manner, and other such matters. The fee usually reflects the cost that goes into resolving these matters, and as such is usually a fair charge for the completion of your transaction.
Example of a service fee in real estate
Sal is the owner of a very successful pizza parlor in the downtown area of his city. With hundreds of customers visiting daily to try his famous pizza recipe, Sal has managed to save a decent sum of money that he hopes to use to open another pizza restaurant at another location. After finding a suitable location and realtor, Sal is ready to go ahead with the purchase.
Sal goes ahead with inspecting the property to make sure it is suitable for his purposes and then happily agrees to close the deal and make the property his own. After some haggling on the price, the two parties settle on a mutually agreeable arrangement and go forward with the purchase. Papers are signed, and Sal is about to become the new owner.
Once all the necessary paperwork has been completed, the gross and net sales prices are calculated. In addition to the 5% commission charged by his real estate agent, Sal is informed that he must also pay his realtor an additional $400 service fee in order to ensure that everything is in order for the purchase.
Popular Real Estate Terms
Relating to trees or shrubs normally found in temperate climates. Deciduous trees shed their leaves in the fall. Deciduous woods such as pine, oak, Maple, redwood, and spruce are widely ...
Also called accounting or unadjusted rate of return. The return computed by dividing the anticipated future annual net income by the required investment in real estate. Sometimes the ...
Lender's written statement and accounting for the remaining balance, date of maturity, and interest rate on a mortgage. The lender is certifying this information to the borrower or any ...
Recognizes profit on a long-term construction contract as it is earned gradually during the construction period. This approach is preferred over the completed contract method because it ...
After-tax cash flow is a calculation method for companies’ financial performance to show their ability to generate cash flow through their operations. The after-tax cash flow formula ...
Provision in a mortgage that requires the final payment to be substantially more than all other payments. ...
Bond collaterized by real assets. Two kinds of mortgage bond are senior mortgages and junior mortgages. A mortgage bond may have a closed-end provision that prevents the firm from issuing ...
The central core of an urban area. The inner city contains the major commercial center, termed the central business district (CBD). Close to the inner city are also some of the poorest ...
Ownership of property by two or more people in undivided interests, without the right of survivorship. Each coowner's interest may be conveyed separately by its owner. Tenancy in common ...
Have a question or comment?
We're here to help.