Real estate company charging buyers a fee?!? (RE agent, agent, commission)

[christina0001]

Where I live, there is one real estate agency in particular that is huge. On one of their agent's websites, it explains why buyers should use an agent, that the seller is paying for the cost of the buyer's agent, so it is essentially free to the buyer except for a $220 buyers fee that this company charges. When I bought a house in NJ with a realtor, there was no fee. I found this really shocking. We weren't going to use this agency anyway; we are going to interview agents over the next week or so to make a choice, and it just so happens, none of the agents that have been recommended to us are from this agency. But I was really irritated to see that. Is that normal and maybe NJ was weird?

I can tell you right now, if all the agents we interview have a fee and won't waive it, we won't use one. If I'm going to have to pay money, I'd rather pay an attorney to draw up the paperwork. I would like to benefit from the local knowledge of a realtor, but I'm not willing to pay for it, when I know they are getting a chunk of the commission the seller is paying out (and in a sense, I am financing). This is really irritating me so please tell me it's not normal.

[Greatday]

This type of fee, often called a retainer, is not that uncommon with Buyer Brokers. Frankly, I like the idea in that it helps to defray the "tire kickers" who want to waste an agents time, and money, being shown all over town - and they really have no intention of buying

Where I have seen agents use this, it usually will be coupled with an agreement that if the client purchases a property through the agent, the agent will credit the buyer the retainer that was paid

[Tish Thompson]

Christina,

I think the fee you're referring to is the admin fee. Typically that fee covers things like paying for the forms involved and paying the person who manages the transaction for the agent. I use an admin, but I don't charge the admin fee to buyers.

There is also a retainer...which I charge. The reason I charge a retainer is to add value to the services I provide. I want to be treated like the professional I am. Think about it from another perspective...do you have more respect for what you pay for, or what you get for free?

I always credit the fee back to my clients at settlement. If they terminate our agreement prior to settlement, I keep the fee as payment for services rendered.

[JOHN MERRITT]

Originally Posted by christina0001

Where I live, there is one real estate agency in particular that is huge. On one of their agent's websites, it explains why buyers should use an agent, that the seller is paying for the cost of the buyer's agent, so it is essentially free to the buyer except for a $220 buyers fee that this company charges. When I bought a house in NJ with a realtor, there was no fee. I found this really shocking. We weren't going to use this agency anyway; we are going to interview agents over the next week or so to make a choice, and it just so happens, none of the agents that have been recommended to us are from this agency. But I was really irritated to see that. Is that normal and maybe NJ was weird?

I can tell you right now, if all the agents we interview have a fee and won't waive it, we won't use one. If I'm going to have to pay money, I'd rather pay an attorney to draw up the paperwork. I would like to benefit from the local knowledge of a realtor, but I'm not willing to pay for it, when I know they are getting a chunk of the commission the seller is paying out (and in a sense, I am financing). This is really irritating me so please tell me it's not normal.

The fee should also be waived if it is an FHA loan.

[christina0001]

Originally Posted by Tish Thompson

There is also a retainer...which I charge. The reason I charge a retainer is to add value to the services I provide. I want to be treated like the professional I am. Think about it from another perspective...do you have more respect for what you pay for, or what you get for free?

Using a real estate agent is not free. The cost is built into the purchase price and is at least several thousand dollars. Last year, when I bought my car, I didn't pay the salesperson an extra $100 for completing his forms. He made his money off of the purchase itself, after having housed the vehicle, advertised it, showed it to me, etc.

I have all the sympathy in the world for real estate agents who take customers around, and the customer doesn't buy anything. My cousin did that with a few realtors over three years. I can't imagine how frustrating that must be. Having said that, I'm still not paying a fee. If a realtor thinks I am not going to make him/her any money, then he or she is welcome to find a different buyer to work with. I will be paying enough money through a commission [albeit indirectly, but it's still a part of the price I end up paying]; I am not going to be nickled and dimed to death with fees, too.

[North_Raleigh_Guy]

Originally Posted by Tish Thompson

Christina,
The reason I charge a retainer is to add value to the services I provide. I want to be treated like the professional I am. Think about it from another perspective...do you have more respect for what you pay for, or what you get for free?

I understand why some agents may charge a retainer if they have been burned often in the past by "buyers" who bailed on them, but the idea that charging a retainer adds value to the service is a pretty silly notion in my opinion. As Warren Buffet once said "Price is what you pay. Value is what you get". Adding more to the price of a service does not equate to added value.

If I were a potential client of yours I would find the notion that I need to pay for something to appreciate its value an insult to my intelligence.

I appreciate the services of a good RE agent. But I don't need an upfront fee added on to the transaction, even if it will be credited back to me, to make me understand the value.

[shellytc]

Originally Posted by christina0001

Using a real estate agent is not free. The cost is built into the purchase price and is at least several thousand dollars. Last year, when I bought my car, I didn't pay the salesperson an extra $100 for completing his forms. He made his money off of the purchase itself, after having housed the vehicle, advertised it, showed it to me, etc.

Unless you are very saavy, you probably did pay some additional fees on the purchase of your car from a dealership. These are called "junk fees" and are added in. Sometimes referred to as admin fees, and all kinds of other line item names... prep fees, etc.

Shelly

[DavidS827]

Christina -There is no reason you should have to pay a retainer fee, admin fee, or any other fee to your agent. A competent agent should be able to weed out the window shoppers and tire kickers, so there is no reason to charge buyers anything in my opinion.

[magellan]

This is an easy one to answer: "If you don't like the fee, then don't go with that Realtor". Why you would get irritated at a professional for how they structure their business model and revenue stream is beyond me.

Obviously these brokerages and agents adopted a fee for a reason, and if no one was paying it, they would have stopped. Since they haven't stopped, then it's probably a successful system. Again, if you don't like it, then go elsewhere. What do you care.

I think charging a fee, and then refunding the fee if/when a home is purchased, is perfectly legitimate, fair, ethical, and a smart business practice.

[olecapt]

RE is local..

In our market in Las Vegas you would eliminate virtually all of the larger Brokerages. An administrative fee is charged by the Brokerage. The Agents only choice is to pay the fee themselves...so pretty much universally they pass it on to the customer. I ask for it pretty much describing it as a Company "junk" fee though not using the word "junk". One client in 20 rejects it.