Do You Charge Buyers a Transaction Fee?

By
Real Estate Agent with Sky Realty South Austin

Recently I have been in discussion with some colleagues about a Tranaction Fee for Buyers, its not uncommon here to see a Tranaction Fee for a seller, the Realtor pays upfront for video tours, advertising in print and on the web, and for many flyers, just to name a few things.

So what does the Realtor pay for upfront for a buyer?  Well, in my case, gallons of gasoline to tour the clients around our city, printer ink and pages for MLS and CMAs, my time to do all this... break it down more and say my cell phone to call ahead to schedule showings.  How about the cost of all the classes so I can do a professional job for my clients and be informed of all the new changes constantly happening in our mortgage industry and eco-laws and local government ordinances, these all affect how and why and where a buyer can purchase.

I read in the new REALTOR.org, Sept 2008 magazine there is currently a lawsuit challenging "administrative brokerage commission" this is on page 18.  The lawsuit says it is against RESPA.  This suit is being considered as a class action suit.

At this point, I have never charged a transaction fee... I was considering it... maybe I will reconsider until this is all sorted out.

Posted by

South Austin Real Estate

close

Re-Blogged 1 time:

Re-Blogged By Re-Blogged At
  1. Joyce Kelley 04/07/2012 04:44 PM
Groups:
All Thing's Texas
Austin Texas Realtors
Lone Star Real Estate Professionals
Realtors®
Texas Real Estate
Tags:
class action lawsuit
transaction fees
austin texas real estate

Spam prevention
Show All Comments
Anonymous
Anonymous
s harrison

are fee's allowed to be charged to buyers before closing

Apr 29, 2009 11:04 AM #104
Rainer
265,193
South Austin Real Estate Blog
Sky Realty South Austin - Austin, TX

Dear S Harrison, some agents and agencies, do charge a fee for acting as a buyers representative.  Some do not.   I know some agents charge a consulting fee.  Most of us work 100% commission and only get paid if and when the closing happens.

Apr 29, 2009 01:32 PM #105
Anonymous
Anonymous
Alicia Ramirez

You might want to read over this ruling that I received from our Association:

BROKER LIABLE FOR CHARGING UNEARNED FEE

A broker must perform a specific settlement service to charge a $149 "administrative brokerage commission" fee under the Real Estate Settlement Procedures Act (RESPA).  That was the recent decision of a federal district court in Alabama in the case of Busby v. JRHBW Realty, Inc. (Case No. 2:04-CV-2799-VEH).  This decision serves as a good reminder for REALTORS® to refrain from charging unearned fees under RESPA.

In this case, a seller in Jefferson, Alabama agreed to pay the real estate broker a five percent commission.  However, during the closing and settlement, the broker also charged the buyer a $149 "administrative brokerage commission" (ABC) fee in connection with a federally-related mortgage loan.

The buyer paid the $149 ABC fee, but then sued the broker and succeeded in obtaining class action status for over 30,000 consumers.  The buyer claimed that the broker performed no services for the $149 ABC fee.  According to HUD, RESPA prohibits an unearned fee, such as when a "service provider charges the consumer a fee where no, nominal, or duplicative work is done."

In response to the buyer's claim, the broker argued that the ABC fee was for an array of services, including overhead expenses, regulatory compliance, technological enhancements, and additional commission.  The court, however, agreed with the buyer.  The court observed that the array of services listed by the broker were not settlement services because they did not occur at or before the closing, and any direct benefit to the buyer was negligible.  The court also pointed out that, as additional commission, the $149 ABC fee would be a duplication of the percentage commission already charged.

For more information about unearned fees, C.A.R.'s Legal Department has a legal article entitled HUD's Unearned Fee Policies.

May 02, 2009 08:35 PM #106
Rainer
265,193
South Austin Real Estate Blog
Sky Realty South Austin - Austin, TX

HI Alicia,   that post was dated Sept 2008, and I had stated "At this point, I have never charged a transaction fee... I was considering it... maybe I will reconsider until this is all sorted out".

Here it is May 02,2009 and I still haven't charged one buyer one penny outside of the normal commission split listed in the MLS.  Thanks for your information.  I'm sure the response you have is regarding the lawsuit I had mentioned in the original post?  

May 02, 2009 08:52 PM #107
Rainer
17,603
Alicia Ramirez
Century 21 McMullen Real Estate, Inc. - Chicago, IL
Servicing the North Side of Chicago

Yes, I believe that is the result of the case you mentioned. When I worked for a national real estate company, they had us charge the buyers a $250 regulatory fee (?). No one ever knew what that fee covered other than storage, which I don't believe should be charged to the buyers. Seemed ridiculous. I never charge my clients any additional fees. I feel the commission should cover any services I provide, including the cost of using a transaction coordinator. Using a coordinator is my choice to make so if I use one I should pay them not my client. I'm not sure if this case also includes transaction coordination fees but I know that many agents charge this to their clients.

May 02, 2009 09:51 PM #108
Rainer
232,205
BLR Guy
BLRGUY(Beach & Luxury Realty Inc) - Saint Pete Beach, FL

I am so way behind Gail,Congratulations on your featured post...as a company owner of over 200 agents,I do not recommend our agents charge any extra fees...it just isn't good business

May 03, 2009 07:17 AM #109
Rainer
265,193
South Austin Real Estate Blog
Sky Realty South Austin - Austin, TX

Rick, I don't charge those extra fees either, but sometimes after a buyer has jerked you around several months then flitted off to nowhere, unheard from again, one feels like they should have charged a fee.  LOL..  Just the way it is. I know. :) Part of the job.

May 03, 2009 07:39 AM #110
Ambassador
909,527
Margaret Woda
Long & Foster Real Estate, Inc. - Crofton, MD
Maryland Real Estate & Military Relocation

In my market, it is common practice for brokerages to charge an administrative fee, not an exception.

May 03, 2009 08:36 AM #111
Rainer
3,371
Carlos Cardenas
Keller Williams Realty - Brickell, FL

http://www.realtor.org/diversified_re_firms/real+estate+broker+administrative+fees+where+do+they+fit

Jul 15, 2009 04:39 PM #112
Anonymous
Anonymous
NotAnAgent

I have been following this thread and, as a potential buyer, would appreciate any feedback you all have.

I am trying to purchase a house (in Texas).  The house is being sold as a "short sale," and the seller's agent is being paid a 5% commission by the bank.  The seller's agent, however, is also asking that I submit an Addendum to my offer, stating that I will pay a $5000 "servicing fee" directly to the agent at closing.  I understand that a short sale can be a lot of work for an agent, but this $5000 fee seems like it is in violation of RESPA's statute, since (1) it is a duplicate fee for the work being paid for by the agent's commission and (2) it is a fee that in no way benefits me, the buyer. 

Comments?  Thoughts? 

Thanks,

NotAnAgent in Texas

Jul 30, 2009 11:03 PM #113
Rainer
265,193
South Austin Real Estate Blog
Sky Realty South Austin - Austin, TX

I would think the bank would disagree to a short sale offering a buyers agent a bonus, which in essence is what this is.  Bonuses are ok, builders offer them all the time to buyers agent as incentives to bring clients to see their homes.

Any fee would need to be a part of the HUD-1 at closing and would have to be approved by the bank also.  If a fee is not on the closing statement, that could be considered mortgage fraud.

The listing agent, in a separate agreement with the seller breaks down the commission to be paid to each party here in Texas, that fee is stated in the MLS for buyers agents to see.  If there is a 5% commission to be paid the bank has agreed to that ... usually that fee would be split between the listing broker and the buyers broker.

In todays market of short sales and foreclosures the bank sets the commission and the agents agree to it or not.  A buyers agent should be putting their clients needs and wants before the consideration of a paycheck for themselves and showing all homes that fit the buyers needs and criteria.

I know hope this helps you. Good luck with your sale.

Jul 31, 2009 05:37 AM #114
Rainer
21,856
Kimberly Dotseth
Blend Real Estate, broker/owner - San Diego, CA
Try Our "Cancel Anytime" Listing!

I am adamantly opposed to any kind of junk "admin" or 'brokerage office" or other stupid fee. Pay your own bills, brokers. Don't pass these to buyers. As for the original question, I have never and will never charge a client a TC fee. That's mine to pay if I choose to use one. It's for YOU, not the client. The client only gets copies of what they sign, not your DRE-complaint file that the TC prepared for YOU and your file cabinet.

Never, never, never. Look at it like this: remove junk fees from your way of doing business, your strategy and your vocabulary. What are you left with? An organic sales experience that allows you to earn a commission for your work. And your cost of doing business will be what it is ~ and not for the buyer or seller to absorb.

Junk fees are a pure profit center and buyers should scrub their estimated closing statement from Day 1. Sellers, too!

Sep 28, 2009 03:39 PM #115
Anonymous
Anonymous
Mark

The state of CT and AL got hit hard with a lawsuit.  Before you know it, brokers in Florida will discontinue this practice when someone files a lawsuit against  a broker in Florida.

Nov 12, 2009 02:38 PM #116
Anonymous
Anonymous
James Stewart

I heard someone filed a lawsuit against a broker in Kissimmee, FL in regards to the transaction fee.

 

Anyone got more info?

Dec 11, 2009 09:31 AM #117
Anonymous
Anonymous
Beth

Has anyone paid a $295 buyer administrative fee to Coldwell Banker?

Mar 03, 2010 10:14 PM #118
Rainmaker
916,879
Tony Marriott
Haven Express @ Keller Williams Arizona Realty - Scottsdale, AZ
Associate Broker, REALTOR

Absolutely on the same page regarding retainer fees for short sale listings.

Jun 25, 2010 10:18 AM #119
Anonymous
Anonymous
milew

I am so tired of hearing all of the snivelling and crying.  If you feel like a fee is needed to pay your cell phone bill that you probably use a large percentage for personal use, or you need to be paid for your time that you do MLS searches in the comfort of your home, you should have taken a career path.  Your services should be earned and not bought.

May 26, 2011 07:06 PM #120
Anonymous
Anonymous
Judy

Recent experience...  Seller did not pay a listing transaction fee.  Seller did not disclose not paying the mortgage payments to a private lender/seller and is upside down in their mortgage.  Lender paid the taxes. They were friends of sorts.  Seller did not disclose that she owed 12k in taxes on top of the mortgage, late payment fees, and now the house is listed.  it probably will mean that she has no equity...she is already making noise about paying my fee....and she will need money to close.   I have spent hours on this, and money too, to be lied to by omission and commission. Had I charged a listing transaction fee, she would have come clean sooner and not listed, and my time would not be wasted.  I may or may not get a sale and she may pull the listing.    No matter how well we do our jobs, concealment of the facts in this situation and also out and out lying cannot be accounted for.  "skin in the game" as in a transaction fee for administration fees....photographer, listing coordinator, would be a benefit to all.  I would always refund it at closing.  No loss to the serious seller.

Jul 22, 2011 03:17 AM #121
Ambassador
1,344,362
Jon Zolsky, Daytona Beach, FL
Daytona Condo Realty, 386-405-4408 - Daytona Beach, FL
Selling Daytona paradise for heavenly good prices

We never charge any fees beyond commissions, but see it in the listings on MLS, especially when they are REOs.

Apr 07, 2012 05:06 PM #122
Rainmaker
564,973
Curtis Van Carter
Coldwell Banker Brokers of the Valley, Yountville Napa Valley - Yountville, CA
Napa Valley's Broker Extraordinaire in Yountville

Hi

Thanks for posting this, quite a bit of very good comments. I found it through a repost by Joyce Kelley.

Generally y not the norm in the Napa Valley but a few agents in my company starting do so onlt to have my company tell them not after the lawsuit on advise of our company attorney. cheers cvc

Apr 10, 2012 11:29 AM #123
Show All Comments
Rainer
265,193

South Austin Real Estate Blog

Ask me a question
*
*
*
Spam prevention

Additional Information