When is a transaction fee justified? (3%, dual agency, commission, fees)

[1insider]

Just did another closing where the listing agent charged their client a $295 "transaction" fee on top of the 6% commission they were also being charged. I can see some scenarios where, in lieu of commission or in addition to a low commission, a separate fee might be reasonable but I have yet to hear a justification for a fee in a case like this one where a customary commission is already being paid. It's probably not a coincidence that the seller was elderly.

Anyone got a good excuse for adding a fee other than you can get away with it? I've heard agents justify it to clients as the fee is to pay the people who handle the transaction paperwork.

[MikeJaquish]

I will never do it, but if it is disclosed up front in a written agency agreement, and pointed out to the client, it's hard to fault the client for agreeing to pay it.

[dontaskwhy]

Some offices require such fees. The agent may pay it out of their own commission if they choose to. Can't assume either way. As Mike pointed out, such fees should be disclosed up front to avoid confusion.

[rational1]

6% + extra is an unreasonable.

The time to negotiate this is when signing the listing agreement.

A few years ago I negotiated 5% and got a $300 transaction fee removed.

[Brandon Hoffman]

Originally Posted by MikeJaquish

I will never do it, but if it is disclosed up front in a written agency agreement, and pointed out to the client, it's hard to fault the client for agreeing to pay it.

Agreed. Justified is an opinion. Obviously the seller thought it justified since they agreed to pay it. In the business, hard to say. If there was a concierve or above and beyond service from the agent, such as paying for cleaning or something, I guess then it could be justified.

[MikeJaquish]

Originally Posted by rational1

6% + extra is an unreasonable.

The time to negotiate this is when signing the listing agreement.

A few years ago I negotiated 5% and got a $300 transaction fee removed.

6% of what amount?
I've sold expensive properties and very very cheap properties.

I took 8% in dual agency years ago and lost money.
The big picture matters.

[dontaskwhy]

Originally Posted by rational1

6% + extra is an unreasonable.

Realtors rarely get the full commission, it is almost always split between a buyer's and a seller's agent. Then their agency gets a cut of their commission for most agents.

I am not arguing in favor of the transaction fees.

[Brandon Hoffman]

Originally Posted by MikeJaquish

6% of what amount?
I've sold expensive properties and very very cheap properties.

I took 8% in dual agency years ago and lost money.
The big picture matters.

When I get below 50k, such as lots, I just charge a flat rate and offer a flat rate as the co-broke.

On some of them the percentage would sound ludicrous but 3% of 10k isn't even worth the liability. My time and knowledge have a minimum value.

[rational1]

Originally Posted by dontaskwhy

Realtors rarely get the full commission, it is almost always split between a buyer's and a seller's agent. Then their agency gets a cut of their commission for most agents.

I am not arguing in favor of the transaction fees.

It's still unreasonable on an ordinary-priced house in most markets.

I agree with the other postings that on a very cheap property a higher percentage is warranted.

[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.