BrokerageIndustry News

‘Junk fee’ backlash echoes online

Future-Proof: Navigate Threats, Seize Opportunities at ICNY 2018 | Jan 22-26 at the Marriott Marquis, Times Square, New York

Editor's note: This is the final installment in a series of stories looking at the legal, ethical and competitive issues raised by the growing practice of brokerages charging consumers flat fees on top of percentage-based commissions. Part I explored the industry's rationale for instituting the fees, while Part II examined potential legal liability under the Real Estate Settlement Procedures Act (RESPA). Although questions about their legality remain, a growing number of real estate brokerages are charging consumers flat fees on top of their traditional percentage-based commissions. Federal courts of appeal have issued differing rulings on whether such fees may violate the federal Real Estate Settlement Procedures Act (RESPA), but legal experts say brokerages can defend themselves against lawsuits by making sure the fees are properly disclosed (see Part II). Brokerages that want to collect flat fees from consumers have another issue to consider, beyond their legal liability...