Agents who charge 'extra' fees
Letter to the Editor
By Inman News, Friday, May 29, 2009.
Re: 'Real estate fees raise RESPA controversy' (May 28)
Dear Editor:
This has been going on for years in the industry. Many a listing agent has added this "flat fee" to augment their commission structure, with "administration fee" as the title. The fee is used to pay for the agent's personal assistant, advertising, etc.
The broader question is: Do commissions charged to a seller in today's declining market pay the bills of the company and agent and make them viable business entities?
I've never been comfortable charging "extra" as I feel I base my business plan on income "earned" through my brokerage fee. Brokers may seek other outside income streams: property management, allied services, escrow, etc.
Some agents charge an extra fee because "they can," and they would be very hard-pressed to justify the fee.
Sure, they go on about having administrative help, office fees, etc., but these are ALL costs of doing business. Your fees should cover this. If you cannot be viable as a business with the brokerage fees you are charging, then you must adjust your income stream by either charging the consumer more or developing other income streams.
For a Realtor working on a split, this is hard to do. The brokerages need to either cut some of the deadwood -- from the many agents working in the large offices -- or train their sales folks to present a strong case for a bigger brokerage fee and why that is the overall smartest marketing stance a consumer can take.
I think if we let go all of the non-performing Realtors/agents now pretending to be "working," our unemployment in this industry would make Detroit look like a boomtown!
Michael Kelly
Keller Williams Realty
Santa Rosa,Calif.
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Submitted by John Rakoci on May 29, 2009 - 3:27pm.
The fees my previous agency charged me became rediculous. They started trying to justify by making 'junk' agents did not want or use available. That was on top of the franchise fee and O&E monthly charges and on and on. When I asked for an increased split they acted like I was asking for the moon. Moving to an independent costs me next to nothing and the split is a lot better. More for less. I'm sure a customer would see things in the same light. If an agency or agent cannot make it on a normal commission structure they need a different business plan or to find another business.
Submitted by Jeff Manson on May 31, 2009 - 9:40am.
Not sure what the problem or difference is whether you increase your commission or just charge an additional flat fee as long as it is disclosed to the seller.
Brokers should be able to charge what ever they want (more or less). Then the consumer can either choose to hire them or not. That is what free markets are all about.
Jeff Manson
American Dream Realty Hawaii
Hawaiis
Submitted by Deborah Madey on June 2, 2009 - 8:07am.
It's very wrong to impose an admin fee at closig upon a buyer, when a buyer believes the buyer broker (agent) was being compensated entirely and solely from seller proceeds.
There is, however, nothing wrong with a buyer broker having a minimum fee. It is price fixing and illegal to demand that a buyer broker work for the coop fee offered via MLS if that is below the buyer broker minimum fee standard. How the fee is constructed is far less important than complete disclosure.
I find the whole attack on listing brokers short sighted. Rates discussed for illustration only and not indicative of any actual rates in any market.
Example #1: Listing Broker charges 8% commission on $300,000 property = $24,000
Example #2: Listing Broker charges 6% commission + $299 admin fee on $300,000 property = $18,299
Example #3: Listing Broker charges 4% commission + $399 admin fee on $300,000 property = $12,399
So, let's attack Broker #3 for taking advantage of someone. That bad Broker #3 is a con artist who is ripping people off! But, Listing Broker #1 is the good guy who didn't charge any junk fees. How illogical is this?
Why are we stuck in a mindset that says "we must only charge a fee based on commission at closing"? That screams anti-trade.
There is still way too much expectation in this industry that all brokers conform to a specific model. Don't charge too little, don't charge extra fees. You are bad if you do that. You must charge a commission at closing and it better be the "right" commission. If you charge to low, you will be called out as obviously stupid and inexperienced. I think we need to shed the expectation of conformity and treat business models that differ from ours with respect. The thought of "my way" is the only "right way" is getting a bit stale.
It's about disclosure and being up front in your business dealings.
Deborah Madey- Broker
Peninsula Realty Group,Inc. - New Jersey
Deborah@PeninsulaFirst.com
Submitted by Kristin Noll-Marsh on June 3, 2009 - 1:02pm.
I think most people disagree with brokers who charge 6% or more plus an admin fee. I don't think charging less than 6% plus a fee would be unreasonable and it makes sense and saves the consumer money.
What doesn't make sense is claiming that "costs of business have gone up, while commission percentages have remained the same or gone down, so we charge an extra $300, rather than increase the commission 1%."
Ummm...are we forgetting that the price of houses has also gone UP considerably, as well? The average price in my neighborhood was $50,000 thirty years ago = $3,000 commission vs. $250,000 today = $15,000. That's plenty of compensation and if you can't make a living on that, you need to rethink how you are organized and advertise - not nickle & dime the consumer.
http://bestmilwaukeehomes.com
http://blog.bestmilwaukeehomes.com
Submitted by David Gorman on June 5, 2009 - 4:48am.
Commissions/Fees are negotiable as long as buyer or seller agrees.
Daid Gorman/Broker
Cashback Realty.com
Offering home buyer rebates to home buyers.
Submitted by Dave "Utah Dave" Robison on June 9, 2009 - 8:40am.
Love the illustration Deborah. lol Very well said. I think you brought something up....maybe Hud will come up with an APR for Realtors in order to compare charges and fees?
http://www.UtahDave.com
Your Friend,
Utah Dave