Settlement Agent Fees Explained

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If you’re buying or selling land or property, you’ll be aware that you’ll be required to pay settlement agent fees. 

 But when you break it down, there may be more fees than you realise!

The following provides an overview of what settlement agent fees you should prepare for.

What Is A Settlement Agent Fee

Settlement Fee

The settlement fee is the amount you pay your agent for their work with regard to the settlement. Some agents charge a fixed fee, while others charge based on the value of the transaction. The fee is usually greater for a purchase transaction than for a sale, because there’s more work involved.

It’s wise to shop around before deciding on a settlement agent. Talk to a few different agents about your specific circumstances and ask for a quote. Compare their fees carefully and make sure you’re getting a fair deal. It’s also important to choose someone you feel comfortable with, because you’ll be liaising with them quite a bit throughout the process of settlement.

What’s included in a settlement agent fee?

Your agent will:
If you are the purchaser, your agent will also:

If you are a seller, you should discuss with your agent exactly how and when funds will be managed – that is, how and when funds will be deposited into your account and whether your settlement agent will pay your real estate agent’s commission out of those funds, or whether you’ll need to take care of that yourself afterwards.

Of course, you also have the right to expect that your agent will be available for professional advice via phone and email, and that they will make every effort to keep you up to date every step of the way.

Are settlement agent fees regulated?

As of February 2016, settlement agents are free to set their own fees with no maximum limit. However, they are bound to:
Bill
‘Hidden’ settlement fees
Some transactions require further work, and this can’t always be anticipated right from the outset. Often, issues can unexpectedly arise in the course of settlement, and in these cases, additional fees may apply. But you can avoid surprises by planning ahead and understanding the potential complications.
Extra fees often apply for settlements:
Accumulate
General Office Disbursements
‘Disbursements’ refers to office costs incurred by your settlement agent in the course of completing your settlement. This generally includes costs for postage, phone calls, faxes, printing, and so forth. Any transaction service fees charged by Property Exchange Australia Ltd (PEXA) also fall into this category.

Offices may charge a fixed amount for these disbursements, or they may charge on a per-item basis. Other agents prefer not to charge separately for office disbursements and include office costs in their overall fee or charge only for the most significant costs, such as payment for couriers or express delivery.

Government, statutory and financial institution charges

These aren’t required to be included in a cost estimate, but most agents will provide you with a list of expected costs to help you with budgeting. Typical additional fees include:

Government Statutory And Financial Institution

And, of course, it’s important never to enter into any large transaction without also having a full understanding of the ongoing costs that it will entail – bank fees, interest and repayments; land tax and/or owners’ corporation fees; utilities and maintenance… the list goes on! If you’re still not clear on exactly what’s involved in settlement or what costs you may incur, please contact us here at Residential Settlements to talk about it in person.