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I'm just finding this post because I was doing a little extra research into these "admin fees," etc... I see that I'm about two years behind the last post so this may just be me talking aloud to myself. Anyway, I'm a Broker in Texas and I just came from a closing where the selling agent was charging his client (the buyer) an extra $295 fee that basically screwed up the entire closing for about a day because the buyer hadn't paid it before the closing and didn't bring enough money to closing to cover the expense, blah, blah, blah.
Personally, I do not charge these types of fees. I think even the small amount of extra money leads to too many questions about ethics, actual services rendered, etc... I simply don't want all the headaches assocaited with these fees and I don't want my clients to get the feeling that I'm picking their pocket books. That being said, it is neither improper, nor illegal to charge somebody money for doing a job. The client has the absolute right to refuse any charges that they may deem unnecessary and choose a different path or Realtor, but they need to do that upfront when they sign a listing agreement or buyer's representation agreement rather than waiting until the end of a transaction to start questioning charges. All charges and fees should be shown in the very beginning of the process. If not, that's an issue in and of itself.
The following are examples of additional fees that I, as a Realtor, may charge to a possible client:
(1) I have plenty of potential clients who want to lease a property and want me to help them find said lease home. We are typically only paid 1/2 of the first month's commission on a lease. So, in most cases that averages out to a $500 commission. Let me assure you that people who want to lease homes will ultimately ask to see at least 5+ properties on the average. In Dallas-Fort Worth, that's a lot of driving and work for $500. I simply tell them that in order to make a fair amount of money working to find them a lease property that I must charge $1500 or so upfront from the prospective client so that I can make money from the transaction. With the price of gas now, a $500 commission could be cut down greatly with just a few days of driving and work. 99% of possible lease leads go somewhere else once I state this fee...which is A-OK by me. Leases are a complete beating for little to no money. Would you want to drive around and spend several weeks of your time "helping" for about $500? Me neither. Conclusion - There is nothing wrong with setting a upfront fee for your business and your personal time/help. Note- I do not do this on homes that I list for lease. This only applies when a possible client wants me to help find a lease listing.
(2) I once interviewed for a listing where the sellers were completely in love with their home and thus completely out-of-touch with its true worth and how to market the home. They wanted a large dinner party for all the area agents to announce the listing. The house was worth about $425K. Of course, they expected me to pay for the dinner party as part of my "marketing." I put an end to that right away. I offered to split the cost of the dinner party with the understanding that the signed listing agreement would call for reimbursing me for my expenses should they decide to terminate our listing agreement prior to the home selling. They chose to go with another agent who listed the house (at a crazy price) for $750K. They eventually went through four (4) Realtors and two (2) years on the market before it sold for $405K. There is no telling how much money the other agents lost on this house before they were fired. To give you a quick example of how out-of-touch these people were, they actually stated that they "don't believe in comps" when I presented my initial case during the listing interview for why I thought the house was only worth $425K. That's a true story.
Every case is different, but if it is done honestly and upfront, there is nothing wrong or unethical with charging money to a client for our services. If you don't like what a broker is charging, then find someone else. That's your right as a potential client.
And, to address one of the earlier posts about how Realtors will become a thing of the past much like Travel Agents... Keep in mind that a real estate transaction is chalked full of legal, binding agreements and contracts throughout the entire process. There are no grace periods or learning curves to legal contracts. Not knowing the law or not having a full understanding about what you are signing is not a valid legal defense in a Court of Law. There have been cases, and are still cases, about homeowners or buyers being forced to sell and buy homes against their wishes because they signed the binding contracts and agreements. Ask one of those parties to a civil suit how important it is to have somebody representing you who knows real estate law and the consequences of agreements.
Last edited by dallastexasbroker; 06-18-2010 at 12:54 PM..
I can understand a Realtor asking for additional fees to their seller if their marketing plan is extensive and costly. However, how do you feel about Brokers charging an additional "commission" or fee to their buyers (and the seller) when making an offer??
[quote=azkylady2;1556306WTF? You would think the 6% is enough. Is this normal? those expenses are all part of being a realtor, just like a hair dresser pays for her own sissors, blow dryers and tools to do her job, a painter buys his own drop cloths, ladders, and brushes, lawn care people bring thier own mowers, rakes, weed eaters,, etc etc you get the pictute, any job in some way cost you out of your own pocket, realtors get to much already, extra money to give them should they spend some advertiseing and the house don't sell? I don't think so. Thats a tough sell[/quote]
I'm not a Realtor, but I have spent more than 25 years in the communications business. You and others who are poo-pooing this fee clearly have no idea how much it costs to list a home in print publications or on real estate TV programs. If you think your house will sell through a free ad on Craig's List or only by appearing on the MLS, by all means refuse to pay the fee.
But if you are expecting to be listed in quality sales publications (especially with a photo), there's no way a Realtor can afford to pay those fees -- in this volatile and competitive market -- out of his or her commission, unless your house is nearing or above a million $. The smallest display ad (1/32 of a page) running FOR ONE DAY in the Review-Journal or Sun can cost as much as $350.
Please note also that the 6% you speak of is SPLIT between the seller and buyer agents (and 6% is lower than many other cities). Half the homes sold in LV go for under $250,000 and many agents are now selling only a few homes per year. Do the math. Second, your comparison to scissors, drop cloths, and rakes is just silly. Those are reusable tools. An advertisement is not reusable for other clients, although a large agency that runs many ads will get a better rate -- a thing in the client'sfavor.
As several others have said, the OP should discuss this contract line with the agent. Find out exactly what the money is for. Anyone who doesn't like it, shouldn't list with that agent or should negotiate it down, but don't think for a minute it's illegal or unethical.
I'm not a Realtor, but I have spent more than 25 years in the communications business. You and others who are poo-pooing this fee clearly have no idea how much it costs to list a home in print publications or on real estate TV programs. If you think your house will sell through a free ad on Craig's List or only by appearing on the MLS, by all means refuse to pay the fee.
As several others have said, the OP should discuss this contract line with the agent. Find out exactly what the money is for. Anyone who doesn't like it, shouldn't list with that agent or should negotiate it down, but don't think for a minute it's illegal or unethical.
It is unethical to spring a fee on someone at the last minute, as many of these fees are - and it borders on an ethics breach when a seller's agent tries to stick a buyer with a fee for things like "negotiating" the short sale, as is becoming common. These fees may make a buyer walk, not because they don't like the property, but because they feel ripped off - (and rightly so!).
FWIW, don't just direct your ire at the re agents/brokers - you'll find lots of junk fees at the title office and your loan banker/broker as well. All of these businesses are counting on the "money truck" being backed up by the buyer, and no one wanting to "kink" a deal over a few hundred bucks - the problem is, there's quite a few people looking for a handout when you buy a house.
As for the statements above - when selling a house, the "open house" isn't done to sell your house, it's done to generate prospects for the agent. Many real-estate display ads feature listings that other brokers have, again, to generate leads - no one cares if your particular house sells - it's all about making the phone ring. Car dealers do the same thing - they have ONE new car for $13,995... but it's pink with a brown interior when you call for details... "but for just a few more dollars, we can get you one you might actually want"...
Most houses sell to buyers via MLS. Serious buyers have MLS ads emailed daily by their agents. Lead time for pretty magazine ads greatly exceeds sales times for choice properties that are priced right.
Not that I like paying anymore than I have to for anything, still I have no problem with someone telling me in advance that their is a fee for services rendered. Just tell me in advance please. LOL
Not that I like paying anymore than I have to for anything, still I have no problem with someone telling me in advance that their is a fee for services rendered. Just tell me in advance please. LOL
The buyers agent is paid by the seller. It's a contracted amount determined by the listing agent and the seller.
A buyers agent should not charge the buyer anything without having a written agreement in advance.
If an agent springs last minute fees on the buyer that you have not agreed to in writing in advance, do not pay it. The agent cannot hold up escrow to try and collect any fee. If he tries, then call his broker immediately.
A buyers agent may wish to have a buyer/broker agreement with the buyer, with some mutually agreeable amount that the buyer pays up front and is refunded at close of escrow.
This is done to protect the agent in case s/he shows the buyer 50 houses and then the buyer drops the agent to use the sister in law part time agent to do the contract. In that case the agent gets some of his expenses covered during the time the buyer wasted his time.
The buyers agent is paid by the seller. It's a contracted amount determined by the listing agent and the seller.
A buyers agent should not charge the buyer anything without having a written agreement in advance.
If an agent springs last minute fees on the buyer that you have not agreed to in writing in advance, do not pay it. The agent cannot hold up escrow to try and collect any fee. If he tries, then call his broker immediately.
The brokers are the ones demanding the fees. Is it illegal? - I think so, but it's still pretty common, and the AZ Department of Real Estate is toothless in all but the most egregious cases.
Buyer Broker agreements provide that the Buyers Broker/Agent will recieve compensation from the Sellers Broker. BUT, in the event that the amount recieved does not equal a certain amount, the buyer agrees to make up the difference.
Buyer Broker agreements provide that the Buyers Broker/Agent will recieve compensation from the Sellers Broker. BUT, in the event that the amount recieved does not equal a certain amount, the buyer agrees to make up the difference.
I'm not sure how that would benefit a buyer, and in any case we've veered a bit off topic.
Help!!!! I'm normally on CD alot but have been busy with house hunting and holidays. I just googled 'AZ Broker's Administrative Fees' and came upon this thread. I also came upon an article from Peter G. Miller on Realty Times from December 16, 2011 which clearly states this fee is illegal in Arizona and violates codes of the Department of Arizona Real Estate.
The situation: We found a lovely home in our neighborhood that gives us just a bit more room for Dad moving in with us, as we love our town and neighborhood but will need more elbow room but didn't want to give up everything we love here...great courteous quiet friendly neighbors in a small town feel but 20 minutes to Scottsdale for shopping and 30 to Sky Harbor Airport and stunning mountain and fountain views to boot.
So-o-o-o....we went to make the purchase offer (and this would be our fourth real estate transaction here in AZ so we are not newbies to AZ RE) and after bringing up a few impractical terms on the offer to the agent, she sent us a revised (???--not really) one and threw in an extra couple a pages to sign. One for her as dual representation....although it was already clarified on the purchase offer and apparently not needed at first...and another for the BAC (Broker's Administration Commission), which is only an ESTIMATE at $695, which was also not needed the first time around.
When questioned, she explained that all brokers do this now (not to our knowledge as it was not done in our previous RE transactions as Buyers 2 wks. ago, 1 mo. ago and 1 yr. ago with AZ properties). She said the Seller also will be paying $695 BAC.
I do not at all like that she's slipping things in with the revised Purchase Offer and we spoke to her today to change some terms that give the Seller an escape route to breach the contract w/o reason. We would love to continue forward with this deal but dislike the greediness of the agent/broker and flightiness character of the Seller to proceed with the contract and recently added admin. fees to the point that we will walk away if our refusal to pay an estimated (or more if they see fit) $695 fee and change terms so the Seller cannot walk away once under contract w/o good reason is unaaceptable to the agent.
Your thoughts, CD people, would be most appreciated ASAP as she's sending another supposedly improved contract over in the morning but holding tight to the $695 or TBD BAC. It just doesn't seem right.
Last edited by makeitagreatday; 12-18-2011 at 10:39 PM..
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$695 Admin. Fee to Buyer?????
