Q: My buyer’s broker wants me to sign an agreement that states I will pay a $195 broker fee if I purchase a home using their Realtor.
Is this common? I questioned it and the company said it was for administrative fees. I’m trying to decide if I fight this or not. Is this normal?
A: You’ve waded into one of the thorniest new trends in the real estate brokerage world and, for that matter, other businesses. While commissions have never been higher, brokerage companies are looking for ways to increase revenue. One way they’ve decided to do it is to pass along to buyers and sellers some of the costs of running the office.
I find this fee to be highly objectionable. Although the commission paid by the seller is generally split between the buyer’s broker and seller’s broker, and each of those fees are split again between agent and broker, there’s should be enough cash to provide the broker with a healthy profit after paying office fees and expenses. If there isn’t, then maybe the broker needs to look at finding ways of raising office efficiency and productivity.
The brokerage company your agent is working for will be paid a commission. That should be enough. You should push back and say you’re not going to pay an extra $195 fee on top of what else they’re receiving.
After talking with several agents (who say they are embarrassed to have to ask their clients for this small fee on top of everything else), my understanding is that if you push back hard enough, most brokerage firms will either rescind the fee or reduce it. However, you should know that in some cases, the real estate company will deduct the fee from what the agent will get if you don’t pay the fee.
Some real estate agents acknowledge that if they receive a split of a 6 percent commission, they are more willing to take care of the fee themselves. But it the commission is less than 6 percent of the transaction, they would prefer to have the client pay the fee.
Here’s something else you might want to ask about: In some real estate markets the “paperwork” is mostly done by the listing office rather than the buyer’s agent’s office. You should inquire as to whether the fee is being charged to you because there actually is more paperwork generated in your market on the purchaser’s side of a real estate transaction rather than the sellers.
I’m not sure this will change your feelings about paying the fee, but it’s always helpful to understand more about the reason why you’re being charged it.