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I bought a house one year ago. One of the closing costs charged to me as the buyer was a $695 administrative fee payable to my agent's real estate company. The seller paid a 3% commission to my agent's real estate company. The house is in Tennessee.
I have bought houses before in other states, and as the buyer, I was never charged an administrative fee payable to my agent's real estate firm. The seller in each case paid the commissions.
What gives? Has something changed? Are buyers now being charged an administrative fee payable to their agent's real estate company, even though the same company receives a commission from the seller? Or is this peculiar to Tennessee?
Common here in all the national franchise operations. Our broker uses $350. And it is always paid by either the buyer or seller or by their agent.
To some degree it is driven by the mobility of the better agents. They pay a low or no split to the brokerage, just a desk rent, so the admin commission is actually how they sustain the brokerage.
The agent can waive it and simply pay it out of the commission. Common on larger deals.
One of the closing costs charged to me as the buyer was a $695 administrative fee
What gives? Has something changed?
It's a nearly criminal re-casting of the long standing basic deal structure.
Car dealers like to do the same thing... charging the buyer extra for doing their base job.
Yes this is common now. I don't think it's a good practice but seems fair as long as it is disclosed at the beginning. $695 seems really steep though, I'm used to $250-350.
One of the closing costs charged to me as the buyer was a $695 administrative fee payable to my agent's real estate company.
It's commonly called a "junk fee" as some outfits are always out to suck more money out of their "clients". You don't have to agree to it. Normally, for them to be able to collect on such a fee (this may vary by state) you'd have to agree to pay for it in writing. They usually bury these types of fees in the fine print of representation contracts.
I bought a house one year ago. One of the closing costs charged to me as the buyer was a $695 administrative fee payable to my agent's real estate company. The seller paid a 3% commission to my agent's real estate company. The house is in Tennessee.
I have bought houses before in other states, and as the buyer, I was never charged an administrative fee payable to my agent's real estate firm. The seller in each case paid the commissions.
What gives? Has something changed? Are buyers now being charged an administrative fee payable to their agent's real estate company, even though the same company receives a commission from the seller? Or is this peculiar to Tennessee?
Thanks
It's a new business model that some brokerages are using. Savvy buyers take one look at that admin cost and insist that it be removed, or that the agent pays it out of their commission. If not, they should seriously consider finding another buyer's agent at a different company. If a company loses enough buyers to other companies, or the agents are hit with $700 fees on TOP of their commission sharing to the brokerage, you better believe they'll drop it like a hot potato. I know several agents who have left brokerages who are trying this model.
It's a new business model that some brokerages are using. Savvy buyers take one look at that admin cost and insist that it be removed, or that the agent pays it out of their commission. If not, they should seriously consider finding another buyer's agent at a different company. If a company loses enough buyers to other companies, or the agents are hit with $700 fees on TOP of their commission sharing to the brokerage, you better believe they'll drop it like a hot potato. I know several agents who have left brokerages who are trying this model.
Calling it a "business model" is a polite way to put it (albeit accurate).
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