When is a transaction fee justified?

[1insider]

Originally Posted by MadManofBethesda

Define "agreed to it." I've never once had an agent specifically point it out. I've just been presented with the listing agreement(s) with the transaction fee included. And when I've pointed it out each time, I get the standard "oh that's not for me; the agency requires it." And then I tell them that I don't care who or what requires it; I'm not paying an additional few hundred dollars on top of the tens of thousands I'm already paying. Inevitably, the fee gets stricken from the contract. I neither know nor care whether the agent then pays it out of pocket. It's just a garbage fee added because brokers think (and probably know) that most of their clients are gullible idiots who will pay it. I'm in the process of getting ready to list and sell my third property in the last few months so I speak from experience.

I have the same issue with retail car dealerships.

Totally agree. We had a local brokerage that had a $395 transaction fee paragraph printed on the last page of the standard listing agreement so it appeared to be an unchangeable part of the listing agreement. I can assure you, many people being charged that fee did not have it specifically pointed out to them during the listing agreement presentation although their signing of the agreement with the buried paragraph, was them technically "agreeing to the fee".

I would bet my commission check that the elderly seller at my closing this week who paid a full 6% plus $295 did not understand that her agent was taking advantage of her reduced awareness and health.

All consumers reading this, please, Do Not Pay A Transaction Fee. Demand it's removal and like the poster above experienced, it will go away. Do not allow yourself to be ripped off by an unscrupulous agent. In the event your agent is not collecting a commission, some other form of pay may be called for but a fee on top of commission is almost never kosher.

[Joylush]

Originally Posted by MikeJaquish

The shame of it is when the client first learns about the charge at the closing table and figures the ball is rolling and they may as well go ahead.
Many consumers, and also many agents, struggle with the closing documents.

I’ve had this happen. Luckily the realtor was present because I said, “I never agreed to that and don’t like feeling tricked by having something snuck in that wasn’t specifically disclosed to me.” She knows I own multiple houses and there would be no chance I’d ever hire or recommend her again if she didn’t waive it. So of course she did.

[MikeJaquish]

Originally Posted by Joylush

I’ve had this happen. Luckily the realtor was present because I said, “I never agreed to that and don’t like feeling tricked by having something snuck in that wasn’t specifically disclosed to me.” She knows I own multiple houses and there would be no chance I’d ever hire or recommend her again if she didn’t waive it. So of course she did.

I would lean towards never using an agent again just because of the attempt to sneak a last minute charge in.

[Joylush]

Originally Posted by MikeJaquish

I would lean towards never using an agent again just because of the attempt to sneak a last minute charge in.

I used her for 14 purchases and sales. I had plenty more after that. When I told her I found an agent offering me a 3.5% commission fee v her standard fee of 5% and asked her if she could (not match) reconsider her fee to me due to the amount of business I’d given her she said no. I’ve been very happy with my new realtor, she’s done five sales for me and I referred her to two other investors I know (she charges them 4.5% for the first one and 4% for any more than one)….they are happy too. I had a long term relationship with my previous realtor so tried to stay loyal to her but finally realized that was stupid. The new one is actually better in every way.

[johngolf]

Originally Posted by 1insider

I can see no good reason to add a few hundred dollars as a fee when it could have been included in the percentage. To me, transaction fees are the undercoating, dealer prep and extended warranties of the real estate business. Change my mind.

Smells like them to me.

[johngolf]

Originally Posted by MikeJaquish

I would lean towards never using an agent again just because of the attempt to sneak a last minute charge in.

I agree.