BrokerageIndustry News

The house that roared

Property sale set stage for battle on fee issue

Editor's note: a version of this article was originally posted on the Inman blog Wednesday, May 27.It may look like your typical American home, but when this property in Trussville, Ala., changed hands for $187,000 in 2004, the stage was set for a legal battle that could have implications for every real estate brokerage's business model.The buyer, Vicki Busby, was charged a $149 "ABC fee" (administrative brokerage commission) on top of the $4,675 commission she paid her agent (the agent's split of the 5 percent commission on the sale -- see the HUD-1). Busby's agent didn't see any of the ABC fee -- it all went to the brokerage, RealtySouth, which is now facing a class action lawsuit alleging it violated RESPA by charging an unearned fee.Such fees are becoming increasingly common in some markets, and often they're even bigger. In a three-part series, Inman News looks at the legal, ethical and competitive issues involved in charging such fees.Defenders of the fees say brokerage...