Agents to blame for 'junk fees'?
Wheel Estate Cam: Episode 13
By Frank Borges LLosa, Monday, February 15, 2010.
Episode 13: Agents to blame for 'junk fees'? Administrative fees charged by brokerages often get a bad rap with consumers and agents, who have derided them as "junk fees" (see story).
But agents' never-ending demands for more favorable commission splits are driving brokerages to collect such fees, says Frank LLosa of Frankly Realty, in this latest edition of the Wheel Estate Cam.
Llosa says he doesn't collect administrative fees himself, but defends the right of brick-and-mortar companies to do so.
"I think one of the main reasons for admin fees is not the broker being greedy ... It's the agent's greed," Llosa said. "The reason the broker is charging the admin fee is because the agents are demanding a better split constantly."
What about new agents, where brokerages may enjoy a 50 percent commission split? Llosa said brokerages have the right to collect administrative fees "across the board, to help the brokers keep the lights on."
Share your comments below.
Watch past episodes of the Wheel Estate Cam.
Frank Borges LLosa is the broker, founder and owner of FranklyRealty.com, a real estate brokerage in Falls Church, Va. He is the creator of the Trust Me I'm a Realtor blog and multiple listing service wiki site FranklyMLS.com. You can follow him on Twitter: @franklyrealty.
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Submitted by Greg Salera on February 15, 2010 - 2:08pm.
I don't believe in admin fees. They are just add-on fees going to the brokerages to help them survive and conduct business as they have yesterday. It doesn't benefit the clients paying the fee and it will not move the brokerage forward. The answer, in my opinion, is for brokerages to cut costs by using technology, consolidating offices, cutting high paid management, and streamlining their businesses. Businesses of yesterday cannot survive today much less tomorrow. Taking more from consumers is not the answer and taking more from the agents is not the answer. Cost cutting and making themselves competitive in todays market is the best direction brokerages can take.
Greg Salera
Partners Real Estate
www.virginiarealtyservices.com
Submitted by Connor and Paris MacIVOR on February 15, 2010 - 6:26pm.
I would have done a bit more research as to what these "admin fees" are being direct to. Are they for a specific service or are they just "crap".
Furthermore, I have to agree, if the agent is pitching their client with "smoke and mirrors" about the administrative fee - they are to blame.
Clients, in this day and age, are more experts in Real Estate than every before. Never before has "feedback" been instantaneous within real estate. With Yelp and other providers - the client is in the Pole Position within any Real Estate Transaction. This could be solved when they give their voice. Which I am all for.
The high pressure model is still in existence within Real Estate - Sales people that are able to force signatures on contracts, listings and by creating a "non-factual" urgency so the client performs, that is just sinful.
Transparency is gaining ground in real estate - examples can be seen by Frankly Real Estate's postings and cutting edge technology - The "telling it like it is" model will overtake the "Coaching" of old.
Connor with HONOR
Connor MacIVOR
RE/MAX of Santa Clarita
The Paris911 Team
(661)400-1720
(818)282-5772
www.Paris911.com
connor@paris911.com
Submitted by Matt Carter on February 16, 2010 - 8:21am.
Connor: for a more in-depth look at the issues surrounding administrative fees, see the 3-part series mentioned in the post above.
Brokerages may claim they are collecting administrative fees for the provision of specific services like record-keeping, operating a Web site, or administrative services. That doesn't necessarily protect them from a RESPA lawsuit.
The way Frank describes the way he's seeing these fees handled on the HUD-1 -- including them as part of a brokerage's overall commission, rather than listing them as a separate fee for specific service -- is exactly what lawyers are telling them to do (see part 2).
Submitted by Teresa Boardman on February 21, 2010 - 6:03am.
in other words the consumer pays a junk fee so that the brokerage . . . the same one that has nothing to do with selling the house . . can make a profit. makes sense to me. I wonder why consumers have a problem with it. Don't thy want brokerages to be profitable? The selfish SOB's probably don't even care about us they just want to buy or sell real estate
Submitted by Chris Somers on February 21, 2010 - 7:34am.
This will be an ongoing debate for quite some time. At our office, the agents keep the majority of the conveyancing costs so yes, the argument can be made that it is for the agents "greed" vs the brokers "greed". Still, there is a valid standpoint behind the "admin fee" or "conveyancing fee" as these costs go towards paying the back office folks, the conveyancors, the storage of a deal for 6 years, the protection of all the parties keeping the documents, ensuring that all documents are in place and so forth. It is a small cost to pass along to the consumer which is justified. Of course I have seen these fees be elevated too where it is too much. Will be interesting discussion for many years to come.
Submitted by Frank LLosa on April 8, 2010 - 7:49pm.
Thanks Connor,
I don't mind companies charging whatever they want. What I don't like is calling it "oh my company requires this" or "this is standard."
Yeah the company requires it because you just stormed into their office and threatened to leave if they didn't bump you up 2% in your splits.
Frank
Submitted by Frank LLosa on April 8, 2010 - 7:53pm.
Chris,
Come on. The admin fee pays for the back end brokerage stuff? I can maybe understand that if the agent is on a 100% split. But many agents get a 50/50% split with their broker. Where is the 50% going? Profit? Nah, it goes to overhead, back office etc. The same as what the "admin fee" is for.
Hence now they call it "Extra commission." I feel bad for consumers sometimes.
Frank
Submitted by Violet Arlingston on May 14, 2010 - 7:08am.
It is a great range of videos. I've also found some at rapidshare SE http://rapidpedia.com . I think this became quite a big problem nowadays and it is great that more and more people pay attention to it thatnks to this post!