The Inman News three-part series, "Broker fees divide Industry," written by staff writer Matt Carter, generated mounds of feedback, demonstrating that the industry is indeed divided on the issue of brokers charging a "transaction fee" — which sometimes goes by other names — that can add several hundred dollars to the percentage-based commission that consumers typically pay for real estate services.

We know the real estate industry — as are most industries in this ailing economy — are hurting, but consumers are hurting, too. Let’s not sully the industry’s reputation by sneaking in extra fees.

Brokers: If you can’t justify these fees to your own agents, they are rightly dubbed "junk" fees.

Add it up: If a buyer or a seller in every real estate transaction got hit with a $200 broker transaction fee, that could amount to more than $1 billion, based on Fannie Mae’s projection of 5.1 million new and resale home sales in 2009.

The home-buying process is already laden with dubious taxes, service charges and fees, and the brokerage industry often questions junk fees in the mortgage area — why not clean out the one closest to home?

There is not sufficient rationale for charging these fees to consumers on top of a commission rate.

These fees are supposed to be disclosed upfront to consumers when they enter into a contract with a listing broker, but there may be a disconnect in receiving yet another disclosure form versus thoroughly reviewing and understanding the fees and which service or services they represent and do not represent.

Some companies have charged the fees for years, and the legality of the fees has been questioned. Birmingham, Ala.-based RealtySouth was hit with a class-action lawsuit in 2004 that claimed the brokerage violated the U.S. Real Estate Settlement Procedures Act (RESPA) in charging a fee for which "no service is rendered," or a "duplicate fee for services already rendered."

That lawsuit is ongoing — U.S. District Court Judge Virginia Hopkins, in an April 20 opinion, declined to throw the case out.

Brokers have sought lawyer-advised wordsmithery to find "proper" ways to disclose these fees on the HUD-1 form, though this is not just a legal issue — consumer perception can be far more powerful than any legal decision.

If these extra fees passed along to consumers by brokers are a difficult sell among agents — the Inman News series points to one case in which the broker’s fees caused a group agents to leave the company — then they aren’t a good idea for consumers, either.


What’s your opinion? Leave your comments below or send a letter to the editor.

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