Sellsius real estate marketing blog

What needs to be done by the clients is to refuse to use that Real Estate Company if they have the Admin. Fee in the contract. Even if the Agent agrees to pay the fee out of their commission. $200,000 sale price at 3% is $6,000. If a company is insistant on keeping the fee to the point that they are going to lose a guaranteed $6000 commission (maybe more if the same company finds a buyer for your house as well) then you probably don't want to deal with that company. How stupid could they be? The company I am using charges $295 fee to list....then another $295 when you put a contract on another house. I signed the contract to list. The agent agreed to pay the fee out of her commission. When I went to put a contract on another house and saw the same fee in there, I couldn't believe it. I haven't signed the contract to buy. Today I am going to call whatever boss they have....and tell them...in order for me to sign the contract to buy.. the fee will be removed. Also......the contract to list will be torn up......and re-written without the fee. The agent was good enough to offer to pay the fee to buy as well. But how crappy is that....that the agents are paying a fee to their own company.......when the fee is just a bogus fee to start with?

Im glad that she won, I really hate it when companies charge fees for ridiculous things. My bank has a few choice ones that annoy me. If you really want to reach out to your customers and make them want to come back, give them everything upfront with no strange fees. You dont like getting strange fees, so dont charge someone strange fees.

While I understand that brokers are having a difficult time covering rising costs I've never been able to find any justification for these add on fees. I would never work for acompany that had this policy. Many consumers already feel as if theya re not getting quality service....nickel and diming clients is one sure way to drive them to flat fee companies.

On behalf of the non-Realtor readers, thank you for pulling back the curtain in the mysterious RE.Oz.

I have had a problem with this for years. By law here in MN we have to call them "commissions" the law also says commissions are always negotiable. Yet the fee is not negotiable. If the buyer or seller do not pay it or if the title company fails to collect it most of the local companies take it out of the agents commission check. The last time that happened to me I started the process of taking the issue to small claims court. The contract clearly states that it is the buyer or seller who is responsible for the fee. The fee is owed to the brokerage yet they would do nothing to collect it if there was a problem, because it was easier and cheaper to take it out of my check. I was expected to collect a fee that was not owed to me. There was nothing in writing that stated I was responsible for paying the fee. Ultimately I got my $300 dollars back with out having to take it to small claims court.

We get annoyed at the 'junk fees' we see lenders and title companies charging - in my opinion, this 'admin fee' or whatever others call it is the same thing, a 'junk fee'. The commissions charged should certainly cover whatever 'duties' that admin fee is for.

I agree with Eli, that fee is ridiculous and does add to the pot of reasons so many seem to look down on REALTORS.

There are two sides of the coin.
1."a fee for which no service was performed" - realtor's expenses can't be simply divided, when you can say this fee is for that and this one for that. I believe it's between the client and realtor. We offer THIS service for THIS price. Finito.
2. I would feel really stupid and embarassed to tell my client "ok and now 149$ please, you know, as a...fee" Client should know from the first moment what will be his obligations. This 149$ fee is really ridiculous and hurting the realtor's business and reputation.

Elli

This is good news to those who are not brave enough to "fight" their rights. At least the court now speaks.

Well, it seems the solution to this issue is just putting the charge on a different line of the HUD-1. That is the way I have seen it done - just rename it. That makes it all OK. What's fun is being an agent trying to explain the fee to a client.
Bottom line, it's just another income stream to the Brokerage, like the up-charge on business cards, technology fees, and transaction fees paid by agents in addition to the usual "splits".

Thank you Ardell and Ken for sharing your experiences with "admin" fees.

I've seem similar nickel and dime fees charged by banks, title companies and attorneys, as well as padded fees for deliveries, copies and mailings. I agree with Ardell the better practice is to put it in the total fee and don't play this game. Consumers hate these fees, as Ken points out, because it is not usually disclosed in advance or explained. At closing, they shake their heads and pay-- maybe because they are relatively small and they are in the check writing state of mind.

I agree with Ken it is unfair to lay this fee on the back of agents.

I've always had a problem with this "add-on" but the Brokers force it down our [the agents] throat so that the agents pay it or the client pays it.

I do know that both FHA and VA will disallow it on the HUD-1 if it's called an "administrative fee". However, my Broker calls it "commission" and it's spelled out in both the Listing Agreement and the Buyer Broker Agreement as such. x (%) + y (flat fee) = total commission. Obviously, if the client balks, it comes out. However, since it's called a commission, FHA has allowed it on at least one HUD-1 I've seen.

The real issue here, as I see it, is that most agents try to slide it by the client and hope they don't pay attention to it on the HUD-1. I've been in more than one settlement where the client I was not representing asking about it at the table while the agent hemmed and hawed. One clients actually said that he wouldn't have had a problem with it if it had been disclosed in advance.

So the decision, for the agent, is to swallow the add-on and pay the Broker or pass it along to the client via full disclosure and defining it so that it's legal.

Joe,

This same result came out when I was an agent in your neck of the woods, which would put it between 1991 and 1996. The first time we saw a direct buyer charge, is when agency shifted from we all represented sellers to buyers having representation.

To this day most agents and sellers do not view the fee for seller services to be roughly half of the total fee charged. General misconception is that sellers pay 6% and buyers pay nothing...so $150 total for the buyer? Woohoo! Of course you and I know better, but almost 20 years later the world at large is still pretty clueless, including agents and brokers. They still list a house and cry to the other agents in the office (who represent buyers here) to SELL IT!

Total commissions still show on the seller side of the HUD 1, vs. the seller agent fee on the seller side, and the buyer agent fee on the buyer side. If the buyer agent fee showed on the buyer side of the HUD 1, people would "get" that the $150 is "extra" vs. "only".

Since it is a case and not a law, most brokers at that time simply instructed,"if there is an attorney involved, don't charge it." So Estate Sales or any sale involving attorneys did not include the mystery, junk fee.

The recommendation of the court at that time was for brokers to either raise their fee up front to include all fees, or have the client sign in advance approving the charge and showing what it is for. There was a checklist of items the buyer authorized the agent to do for them, and since the seller was deemed to be paying the % fee, the buyer was thinking they only had to pay $150 for all that "their" agent did...a bargain from the buyer's perspective. An added fee from a legal standpoint.

The problem is not simply identifying what the $150 is for. The problem is indentifying what the % Buyer Agent fee is for to prove the $150 is not a double billing for something already done in the % fee. So to get a Loan Arranger Fee, you have to prove that the 3% Buyer Agent Fee (or whatever % is paid) did not include that service.

That is why the court said back 20 years ago, either put it all in the % OR list it all out as a menu of services with fees attached for each service...but don't mix the two as in 3% + $150. Seemed logical...but here we are almost 20 years later still talking about it.