Home Buying in Minneapolis>Question Details

Ron Bonnell, Home Buyer in Minneapolis, MN

Is it reasonable to pay $325 retained commission fee $200 Admin fee 3% guarantee when buying a house?

Asked by Ron Bonnell, Minneapolis, MN Sun Aug 5, 2012

Daughter signed buyer agreement which says she has to pay 3% $325 Retained Commission Fee $200 Admin fee.

Is this reasonable? This says she is on the hook for the 3% even if the buyer commission is less such as 2 or 2.75%, and this in addition to the $525 fees. This seems very unreasonable to me. Since I am footing the bill for the down payment, I am not wanting to go along with these extra charges. I see other Realtor options out there which would have provided a 1% rebate instead with no fees, and it is not like she is being driven around to look at several houses. There are only a few in her market price range anyway, and there is not like she is getting anything from negotiation skills since she is being told to offer close to asking price due to multiple bids.

What is concerning as well is daughter was told these fees are much less than she would need to pay if she went with some other realtor. I don't find this to be true from internet searching.

Help the community by answering this question:


I'm curious. What price range is your daughter shopping? I think this should have been the first question asked. Expert assistance isn't FREE and is she getting a novice agent or a seasoned veteran?

I have almost 20 years in the business, would I be worth more than a first year agent? Most certainly. Best of luck!

Ron Jensrud
Exclusive Buyer's Agent
100% for Home Buyers - 100% of the Time!

0 votes Thank Flag Link Thu Aug 9, 2012
Regarding, "Expert assistance isn't FREE." You seem to be implying that the 2 to 3% buying agent commission is nothing and if we don't want to pay the additional fees some realtors have added, that we are asking for their work for free.
Flag Tue Aug 21, 2012
I will try this again. I am not sure how this Trulia forum works. It looks like only the first sentence of what I write goes through in the reply?
Flag Tue Aug 21, 2012
This is for a low cost home,
Flag Tue Aug 21, 2012
What concerns me is that buyers persist in the real estate scam.
0 votes Thank Flag Link Thu Aug 9, 2012
It sounds to me like you are talking about the Buyer Representation agreement. Here is what I say to my clients when I fill in the blanks. This is a form you sign prior to finding a property to write an offer on. The range of commissions payed out ranges from 2.5% and up. Until you find a home to write on, you do not know what the sellers are offering to pay the buyer's agent. Your daughter should not have to make up the difference. If she is being asked to, I would question that. As far as the Broker fee, there is a range. $525 is high but not significantly high. The retained commission fee puzzles me. I have never even considered charging this fee.

Unfortunately, the bottom line is, if this agent has written an offer on a home on your daughter's behalf, she may be libel for the additional fees. My guess is, a simple explanation and conversation w/ the agent will clear up any confusion.

I wish you the best of luck. Any good agent will gladly work w/ you and explain their position in a way that makes sense and is fair.


Mary Myhre
Re/Max Results
0 votes Thank Flag Link Mon Aug 6, 2012
Hey Mary I sometimes use a retainer fee if I want to ensure the buyer is serious about buying a home. You have to use your best judgement, but it is there so if a buyer walks we are still at least compensated for our gas and time somewhat. No one likes working for free, and that is how I practice my business. If the buyer does indeed purchase a home it can be refunded to them, or if you charge an Admin fee I write language in the contract that it will satisfy that part of the obligation.
Flag Mon Aug 6, 2012
I would have to first agree with some of the responses below. I do not understand why this is being brought up after an agreement was signed. Is it possible that your daughter was comfortable with the agreement, but since you are backing her financially that after finding out later you are not? This should have been taken care of before a signing, and my comrades are correct we can not specifically talk about the specifics of THIS contract.

So in truth I may not be much of help to your question, because I can not tell you if the contract signed is "unreasonable". I too follow a strict code of ethics and will not comment on how other realtors conduct their business.

We are not a commodity in this world and we realtors are not all the same. If that was true I would not be fielding questions such as this, and I would not be answering questions on Trulia where consumers are complaining about the service they are receiving from their Realtors.

And in that sense maybe the best advice I can give you is to speak directly with the Realtor and figure this out together. There must always be good communication and trust in our relationship. If those two variables do not exist it will never work out in my opinion.

Good Luck!

0 votes Thank Flag Link Mon Aug 6, 2012
I have no interest in interfering with a contract. However, I will comment on one thing you said, "What is concerning as well is daughter was told these fees are much less than she would need to pay if she went with some other realtor. I don't find this to be true from internet searching". The Realtors' statement is either true or false. If you believe it is a false statement, then my suggestion is to seek (first) an explanation from the agent. If that doesn't work, then seek an explanation from the broker. If that doesn't work, seek legal advice.

Additionally, Realtors subscribe to a Code of Ethics that says we should treat people fairly and honestly.

Hopefully, it's merely a misunderstanding or something that can be fixed.
0 votes Thank Flag Link Sun Aug 5, 2012
Hello Ron,

Every company decides what their charges will be, and the commission is always negotiable. One of the reasons I left one of the large companies was that I did not agree with the extra fees that client were being charged.

While I don't offer a rebate, I do not charge a retainer or any kind of admin fee. There may be an exception to the commission portion if we will be working with a For Sale By Owner home. In that instance, the commission can be agreed on with the buyer and seller coming to an agreement as to how much each side will contribute.

It really comes down to this; do you both feel confidant that this agent will do everything they can to help your daughter get the home she wants for the best terms possible? If not, you should consider your options.

Have a great night!
0 votes Thank Flag Link Sun Aug 5, 2012
W do have a very good buyers' representation agreement here in MN. I think I would try to find out if that is the agreement your daughter signed and where the costs and obligations were identified. Each agent, of course, has his or her own way of discussing and disclosing agency representations and its obligations. Generally this is done early in the contact and beginning to work with a client. MN requires its agents to explain the legal aspect and in our state, commissions are always negotiable. This general is interpreted to mean that the seller agrees to a commission fee; when writing the purchase agreement, the agent goes over the buyers' rep agreement and also identifies customary closing costs and whose obligations these are. We are at a loss in a forum like this to know what information was given, at what time in the pre-purchase contract time frame, etc. Do suggest to your daughter that she ask for a complete discussion of these fees. E Fuller, 612-986-4105
0 votes Thank Flag Link Sun Aug 5, 2012
Your concerns are all quite valid, but should have been addressed BEFORE any agreement was reached. However, if the agent is reasonable, and your daughter now feels as though she has been taken advantage of (though she should not necessarily feel that way), she can always discuss it with her agent and see what they can work out. Perhaps such a discussion will end ammicably, or perhaps not, in which case she can begin to explore her options. Hope it all works out for her...
0 votes Thank Flag Link Sun Aug 5, 2012

Real Estate commission is 100% negotiable.

Not everyone charges an admin fee and very few charge an upfront fee.

In the future it is best to interview a few agents, compare, and negotiate whether buying, building and/or selling.

Good luck.


David Prouty
CRS, GRI, ePro
Broker, Owner, Realtor

Get a Rebate Real Estate

10539 165th Street West
Lakeville, MN 55044
0 votes Thank Flag Link Sun Aug 5, 2012
I believe that Bill Wallace (above) has given you good insight on what you should expect with regard to appropriate responses in this forum.

A licensed agent is not being ethical if they comment on the rates, fees, or other agreements that another agent already has with a client under a signed representation agreement.

Sometimes you need to look deeper into the context of some answers that you may get on this type of public forum. The "spin" on some answers, that seems to feel like more of a sales pitch for the respondent, is quite inappropriate.

The answer that Mr. Wallace gave is the only answer that has any ethical merit. It is up to the agent and the client to decide on the terms of their contract that work for both parties. There is not any "set" or "typical" format or rate that can be called "reasonable" as every agent has different skills to offer and every client has different expectations and needs.

If your daughter and her agent are comfortable with the agreement she has signed, that is all that is required for it to be seen as legally "reasonable."

Best wishes.
0 votes Thank Flag Link Sun Aug 5, 2012
Ron, I can speak to part of this, but not all. I have full knowledge of the state contract. And I understand the admin fee. But I have no idea what the $325 retained commission fee is. We don't have that at Edina Realty.
Ron, there are only two options on the buyer rep agreement to deal with displaced commissions. One is in the first section and requires a buyer to pay a retainer fee up front, just like with an attorney. That is 100% legal and some brokers do that to get a commitment out of the buyer. We don't do that. The second option is to write in (for example) 3% as what is due the buyer's agent if there is a discrepancy later. Now, it is true that it states clearly that if a buyer purchases a house and the listing broker only pays the buyer's broker let's say 2.5%, that technically the buyer owes them that .5%. But no reasonable minded company will actually demand that their buyer pay that. It is not wrong, because that agent and broker deserve to make a commission after all their hard work. And frankly, 2.5% is not fair. But it happens. And if the buyer does not want to pay that difference, then in my case we let that go. But the main reason that paragraph is there, Ron, is for something much bigger, and that used to be common many years ago. And that is where the agent shows your daughter a house…..she comes by that night to take another look…the owner comes out and says, “Hey, want a deal? I am going to cancel my listing contract with my agent on Friday. If you get rid of YOURS, then I will drop the price $5000.” Years ago this was tempting to buyers to get a better deal. Today this never happens. Why? Because of all the legal hoops that we have to go through. Buyer representation is more important today than it has ever been, and the good news is that the buyer does not have to pay us, the seller does. Which is why in my entire career I have never seen this happen. A buyer purchasing a home without good representation and a skilled negotiator for an agent is pure insanity. Would I personally or my company ever sue someone for this? I doubt it. But it is there for a reason, and I hope you understand that.
As for the admin fee…..
Everyone has this. Some are $200, some are $500. Depends on the broker. But here is the real thing about this BAC fee. When I have a buyer I explain how I negotiate terms later on the sale. I will be brief here, okay. I explain to them that I will…..WILL….get the seller to pay this fee. And after 10 solid years of transactions, I can assure you that I have made this work about 90% of the time. This does NOT, however, include transactions where there is a short sale. That will never be paid by that lender. It is not allowed on the HUD. But ….in every one of those particular cases (which has been about 60), I was able to get my broker to waive the fee. And why? Simply because of the one concern you have….they did not want our seller to have to pay the fee when they were already losing their home in the short sale.
I hope this helps you a lot. Hopefully you have a very strong and good buyer’s agent that can negotiate well and keep all of your daughter’s cash in her pocket. My goal is always to help my buyer keep all of their cash and get the other side to pay as much of these fees as possible. The only thing you can’t make “go away”, of course, is obviously the down payment. It’s not 2004 any longer!!
Have a great day!
0 votes Thank Flag Link Sun Aug 5, 2012

The problem with answering your question is that you stated that she has already signed a Buyer Representation Agreement.

The National Association of Realtors Code of Ethics states the following -

Article 16
REALTORS® shall not engage in any practice or take any action inconsistent with exclusive representation or exclusive brokerage relationship agreements that other REALTORS® have with clients.

Therefore, no other Realtor is supposed to really comment on the apprpriateness of the financial arrangement she entered into and can't until she is out of the contract.

Bill Wallace
RE/MAX Results - Wayzata
0 votes Thank Flag Link Sun Aug 5, 2012
Everyone is different in what they charge and how they structure their buyer representation agreements. In 11 years I have never charged a retainer fee and always made sure my buyers pay absolutely nothing related to realtor fees. I make this very clear in my buyer contracts and always, always, always give my buyers an easy way out of their contract with me.
0 votes Thank Flag Link Sun Aug 5, 2012
It is easy to understand your concern.
Let me propose another scenario that is actually at the root of this problem.
Some homes are shown for sale in the Tampa Bay area of Florida that offer the buyers real estate agent $1. Seriously, $1. These 'limited service' homes for sale do appear in the MLS.

The buyers agent must have a conversation with the buyer to address this situation. Are you, dear buyer willing and able to agree to compensation or should I NOT show these homes to you?

This would include many FSBOs, some investor homes, auctions and some bank owned situations, and you bet, some of those 'rebate' homes. Where do you think that rebate money comes from? This creates the situation where the buyer believes the agent is not showing all the homes available. Buyers have a tendency to want to see all homes for sale.

As home buyers and seller find a greater array of choices in regards to pricing and rebates which they have demanded,, and the ability to select the level of service they need, the consumer real estate environment becomes more complex. As you know, for real estate agents, this is not a hobby.

Ron, how would you suggest this dilemma be resolved?

Should a seller, when realizing the down payment is coming from a relative, consider the purchase offer to be potentially more problematic and favor other equal offer more favorably?
0 votes Thank Flag Link Sun Aug 5, 2012
You should interview different real estate agents to compare cost and terms.
0 votes Thank Flag Link Sun Aug 5, 2012
Can't do it. Daughter already signed and as a young first time buyer believed the agent when told these fees were much less than she would need to pay through another realtor.. Is it true in fees is much less than she would need to pay when going through another realtor? I have seen fees of $300 or so. Seems like this was misrepresented by the agent.
Flag Sun Aug 5, 2012
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