Home Buying in Los Angeles>Question Details

Home Hunter, Home Buyer in Los Angeles, CA

hi, is it common for real estate agents to charge a commision fee to buyers? I have to sign a form stating i will agree to pay a $249 commision fee?

Asked by Home Hunter, Los Angeles, CA Wed Jul 27, 2011

Help the community by answering this question:

Answers

43
I hate to admit it, mainly because I proudly could tell clients I worked in probably the only profession, as a buyer's broker, that didn't have to charge my clients. And learning from experience buying real estate before I was licensed, you don't save anything if you buy without representation. But here's the problem, LA, and SanFran, and Fargo, and Springfield, and anywhere in the real estate confines of the U.S.:

Too many times a buyer's agent begins doing work for a prospect/client, which involves detailed listing searches, numerous calls, field searches, and eventually showings. And then this client just disappears. Sometimes without even the decency to explain why. And this agent, assuming the buyer would stick with the process, he/she would get paid, now has nothing to show his credit card company, or his telephone company, or the waiter who just dropped off the bill. It sucks.

Every other professional would charge a retainer fee. Now, because there is a chance the commission on your eventual property will be sizeable, you should ask the agent to get it refunded at closing. But to defend my profession, for once.....your agent will put in at LEAST ten hours of work to arrange and execute your first round of showings. I would hope you agree that a professional making $25 an hour is not extortion.

On the plus side, if agents in LA start charging $250, you'll probably only pay 20 bucks in a place like Modesto.
3 votes Thank Flag Link Wed Jul 27, 2011
I have chimed in on this before but because these answers can get cycled quickly and agents from all over the country have recently provided answers based on local laws and practices, I wanted to make sure that a local view point didn’t get lost in the shuffle. I also am concerned that the “asker’s” agent is being falsely accused of illegal practices. So:
a) Like many of the agents that have responded, I believe that the term commission is in accurate. Consumers often refer to any money paid as “commission”. Given the dollar amount and common local practices it appears to be an ADMIN or TRANSACTION COORDINATOR FEE which is charged by the Brokerage not the agent. This fee is very common among the larger brokerages in my area that, based on market share info, comprise a large percentage of the market. Which means that YES it is common.
b) A lot of negative responses are to the concept of UPFRONT payment. The word “UPFRONT” does not appear in the question! Upfront is a no-no. If this is a transaction coordinator fee it is paid at the close of escrow.
I believe that the more accurate phrasing of the question is, “Is it common for Real Estate Company to charge an admin and/or transaction fee payable at the close of escrow.” The answer in my area is YES. Of course as with all fees this is negotiable. For those not familiar with the practice, what you generally get for that fee is someone to address some of infinity little issues that come up while the agent is in the field. Every agent has received a call from escrow regarding a missed signature, an illegible copy, last minute addendums, etc.. while they were out in the field. An admin person with access to the files and a fax, copier, and computer can resolve these issues instantly versus waiting for an agent to return to the office and can be a huge benefit to the buyer.

One more note to fellow agents: When it comes to compensation for the buyer’s agent, it is the norm that the portion of the commission paid by the seller as the sole compensation. However the Exclusive Buyer Broker agreement provided by the California Association of Realtors (C.A.R. form BRE) makes provisions for the buyer’s agent to receive compensation from the buyer in paragraph 3. It is the bottom 3rd of the first page and continues into about a 3rd of the second page. Most agents don’t ask the buyer to pay anything and therefore tend to blow right past that HUGE section of the contract. I generally do not ask buyers to pay anything however it is neither illegal nor unethical and to suggest otherwise is falsely accusing a fellow agents of doing something wrong.
2 votes Thank Flag Link Sun Aug 21, 2011
Actually, I am hearing from several buyer brokers in my area that they are charging an upfront fee prior to showing property to defray their costs (ie gas, lunch, time, etc) which the buyer gets back at closing, if and when they purchase a home. That puts the kabosh on those buyers who come into town to get a "free" tour and lunch!
2 votes Thank Flag Link Sat Aug 20, 2011
Usually I ask Buyers to sign a contract stating that IF they buy a home that I showed them either in-person or electronically and they used a different agent, then they will incur a fee equal to 2.5-3.0% of the purchase price. As agents we spend a lot of time learning our clients' needs, researching properties and presenting those properties, often times with our own cars and gas. Consumers are always ready to pay a doctor, dentist, attorney or accountant for their professional expertise at rates of $150 plus an hour. We as Realtors are expected to work for free. Something is wrong with this scenario.
2 votes Thank Flag Link Thu Jul 28, 2011
Yes, it happens especially in the Big Apple.
1 vote Thank Flag Link Tue Aug 7, 2012
Our Broker charges an upfront $250 Flat-Fee Commission. Some agents do charge and up front retainer fee(fully reimbursed at close of escrow) since our time is valuable.
Maybe there is a misunderstanding or some clarification would be good.
1 vote Thank Flag Link Tue Aug 7, 2012
They can, but it's not very common at all. Most buyer's agents will not ask you and should not ask you for any money up front. They make their money from the when the home closes and when the broker they work for gets the monies the at that point the buyer's agent will get paid for the time and work involved. Hope this helps....
1 vote Thank Flag Link Sat Aug 20, 2011
In Northeast Florida, It is the Brokers who charge this fee to Buyer & Sellers. The agents only disclose the fee.

The large Name National Brokers seem to have the smaller fees ranging from $150 to $295 per transaction. Many of the Smaller Brokers or those offering discount brokerage services seem to have some of the larger fees, ranging from $295 to $695 per transaction.

I have only had a couple of Clients question the fee. The Buyer's don't seem to have an issue with it. Maybe its because our fee is realatively low compared to others in the area and they accept the fee as normal for our Market.
1 vote Thank Flag Link Wed Aug 17, 2011
Yes, it's common, but as noted, everything in real estate is negotiable.
1 vote Thank Flag Link Wed Aug 10, 2011
Well, it may just be so in the area you are in.. contact some other companies and see if there any adminitrative fees.

Oh and BTW this post:

NO it is not common for a Real Estate agent to charge a buyer an upfront commission in the state of California. In fact, we are discourgaged by the California Department of Real Estate from collecting upfront fees. That said, we are allowed to charge fees upfront it if we get permission from the DRE. But the fee that you are being charged may not be a commission fee. It may be an administration fee. Ask specifically what it is and whom it is being paid to.

Man did that make my head hurt.

So, yes, you can be charged a fee.. but it is discouraged, but they can do it and call it something else but they can't call it that.. so ask what it is called before you are charged.....
1 vote Thank Flag Link Tue Aug 9, 2011
First of all, different states have different rules and customs when it comes to commission. For instance, in some states the buyer pays their agents commission. To the agents in these states, that small charge may seem like a deal. I am pointing this out because I noticed that some of the agents from other areas, seem to think that this charge indicates some sort of scam while local agents are familiar with the standard admin charges in the local market.
That said, the Buyer Broker Agreements provided by the California Association of Realtors allows for the Buyer’s rep to collect compensation from a buyer. This is negotiable. Many firms in my area (Orange/LA County, area. offer transaction coordinators and that is approximately the fee that they charge. In a lot of cases the agent will pick up the cost for their client but again, it’s all negotiable.
1 vote Thank Flag Link Wed Aug 3, 2011
In NYC Manhattan sellers pay the commission. Buyers do not pay unless there is a separate agreement for buyer to pay rather than seller. It would be a lot more than $249.
1 vote Thank Flag Link Thu Jul 28, 2011
Mitchell Hall, Real Estate Pro in New York, NY
MVP'08
Contact
Are they going to take you to small claims court if you don't pay this? I doubt it. Although, most Real Estate Contracts call for Arbitration. Even that would cost them precious time. Columbus took a chance. If you like your agent go for it. You may also be able to negotiate this fee if you buy through them they will waive the fee.

Happy funding, Rudi
Web Reference: http://www.umboc.com
1 vote Thank Flag Link Thu Jul 28, 2011
My guess is it is the brokerage, not the agent, who is charging this fee. It is increasingly common that brokers charge a flat fee for either buyers or sellers to help cover brokerage costs. This became necessary for survival when housing prices dropped drastically while brokerage costs stayed the same.

My brokerage, and my two previous brokerages, charged a fee like this and I very seldom had any clients refuse to pay it after I had explained what it was for.
0 votes Thank Flag Link Tue Aug 14, 2012
I just made an offer that was accepted on a condo. Now, the realtor has sent an Exclusive Buyer Brokerage Agreement that states that as the buyer, I would pay $195 "Broker Only Commission."
0 votes Thank Flag Link Mon Aug 13, 2012
The only commission fee I am familiar with a buyer paying is when they have a buyer broker agreement .
0 votes Thank Flag Link Tue Aug 7, 2012
I know of one agent (not sure what state he is from) who charges an upfront retainer which he will gladly reimburse the Buyer at close of escrow. If the buyer decides not to purchase either through that agent or not at all that agent keeps the fee. In California there is not such up front fee allowable, as far as I know.

This is most likely as you read, a transaction management fee.

Agents work on contingency they do not get paid until the transaction closes. They invest in the client's real estate goal by paying for gas, marketing, time, etc. In order to do so, they may have an assistant and that assistant get's paid regardless of the closing. Some agents will ask for that fee to be paid for by the client as well.

It is best to get a good understanding from your agent as to what you are agreeing to, how that money is spent, and whether or not you have to pay it if escrow doesn't close or you change your mind.
Web Reference: http://www.terrivellios.com
0 votes Thank Flag Link Sun Aug 21, 2011
I have never heard of these fees. The buyer brokers agreement is signed to secure your relationship with an Agency and offer you buyer representation . The comission is usually paid by the seller, unless this is something new in other states unknow to me.
0 votes Thank Flag Link Sat Aug 20, 2011
No it is not common unless you are working with one of these companies that just charges a flat fee. But even then the seller pays all commission.
0 votes Thank Flag Link Fri Aug 19, 2011
No,
The seller pays the listing agent a commission which is shared with the cooperating agent representing the Buyer. There is no need for you to pay a commission as a buyer.
Regards, Eric Bell Broker Associate
0 votes Thank Flag Link Fri Aug 19, 2011
Are you kidding me? You tell the agent to take a hike. And toss a cup of water in their face when walking out from the realtor’s office.

Investor Mike
0 votes Thank Flag Link Fri Aug 19, 2011
Typically no. The commissions are generally paid by the seller.
0 votes Thank Flag Link Wed Aug 17, 2011
Although this may vary depending on where you live and what is customary. Typically a buyer broker agreement is signed to secure your relationship with an Agency and offer you buyer representation (which you need in this business). The commission is typically paid by the seller. Many firms are now charging an administrative fee of $250 - $500 per transaction both the buyer and the seller pay this fee. This fee is charged by the broker and the agent does not keep this money. I hope this helped :)


Kathy Fleskes
Managing Broker, Licensed Realtor
Avery-Hess, Realtors
301-461-3478 direct

Avery-Hess means more EXPERIENCED AGENTS!
Web Reference: http://www.KathyFleskes.com
0 votes Thank Flag Link Thu Aug 11, 2011
I'm not exactly sure how things work in California but I do that in Arizona where I am, it is not common at all. In fact I don't know one agent that charges their buyers a fee.
0 votes Thank Flag Link Wed Aug 10, 2011
Generally speaking, no it is not. And why pay $249? There are many highly qualified agents out there who would not charge you this fee.

Which part of LA are you in? I can refer you to an agent in your area as well.

Please let me know if you have any questions. Thanks and have a great day!
Web Reference: http://www.AdrianChu.net
0 votes Thank Flag Link Wed Aug 10, 2011
It is not common for real estate agents to charge an upfront commission fee, however; it is common for the Broker to charge a flat-fee commission. You only pay this at the close of escrow however.
0 votes Thank Flag Link Wed Aug 10, 2011
Not only does the situation sound odd but so does the amount they are charging. Let me know if you would like to email the form to me to take a look at it and give you my opinion.

Scott Parietti
Realtor®
Premier West Group
323.632.3409-ph
323.527.0777-fax
http://www.premierwestgroup.com
scott@premierwestgroup.com
DRE Lic #: 01820791
0 votes Thank Flag Link Wed Aug 10, 2011
NO NO NO NO NO
Any Real Estate Agent of firm which requires you to pay any fee upfront in California to find you a home is probably not a firm you want to work with.
There are over 500,000 real estate agents in California who would love to help you find a new home, without charging a $249 fee. Why would you do that? We usually are paid 3% commission, so on a $300,000 house, thats a $9,000 commission. Why then worry about $249?
But, they do have the right to run their business the way they want to, it just seems a little fishy to me.
0 votes Thank Flag Link Wed Aug 10, 2011
I was unaware that realtors could charge commissions for work not yet completed. But it makes sense if this is a administrative/ transaction fee. But I would not be comfortable charging this fee to my clients. In fact, this fee, to me, indicates "if you dont find a home, at least I didnt waste my time totally." I use the fact that the buyer doesnt pay me a dime as a selling point.

If I was a buyer, I would look for another agent.

Anthony Tullous
actrealtygroup@gmail.com
310 901 0887
0 votes Thank Flag Link Wed Aug 10, 2011
It isn't the agent that is charging the fee but the brokerage under which they have their license. This can be negotiated thru your agent; get them in on this conversation.

This is a legal fee but must be disclosed to buyers and sellers prior to closing.

Good Luck to you.
0 votes Thank Flag Link Tue Aug 9, 2011
"I have to sign a form stating i will agree to pay a $249 commision fee?"

This is the thing: you don't have to sign anything you don't want to. You can choose to sign it as it is, you can negotiate the fee away or you can seek other agents who don't charge this fee.

The ball is in your court. Play it however you want to.
0 votes Thank Flag Link Sun Aug 7, 2011
In our area the fee was originally called a Transaction fee. It was not and is not charged before the closing take place.

Its origins goes back to offices who hired a transaction closing coordinator to monitor all the office transactions for accuracy. They monitor contractual deadlines,verify deposits, folow up on the mortgage progress. etc. The closing coordinator, alerted agents to follow-up or follow through or did the follow-through for the agent if the agent was less than thorough. The Closing Coordinator also maintained written notes on the files progress, did all file maintenance and storage of the closed files. Since agents are out selling, listing, etc there was always someone the Buyer/Seller could contact with questions about status of their transaction.

The closing coordinator generally had to have a Real Estate license. The fee collected from the Buyer and Seller compensated the coordinator as an independent contractor. Some Closing coordinators were and are paid salary plus the fee, others were and are compensated by the fee collected at closing.

Local companies charged and many still do $150 to $495 per transaction.

After a few law suits throughout the nation, The federal courts determined Brokers can still collect the fee but it must be disclosed as a Brokerage Commission fee.

The fee is mandatory with most Brokerage firms. If the Buyer or seller does not pay the fee, the Broker deducts it from the agents portion of the commission.

The fee is disclosed to Buyer's and they accept or negotiate with their agent.

FHA & VA mortgages do not allow the Buyer to pay this fee at closing. The fee is part of the contract negotiations with the seller.

"Commissions paid to licensed real estate Brokers are negotiable"
0 votes Thank Flag Link Sun Aug 7, 2011
Right now in Arizona, some brokerage firms require buyers AND sellers to pay an additional commission at closing to the brokerage, so that could be what you have encountered.

If it appears the fee is to be paid directly to the agent, call the broker to confirm the brokerage policy on commissions. It is fair game to ask your agent how much he/she will make on a sale in addition to the $249, and why that is being charged.

Another thing you can do is contact the state Department of Real Estate and inquire if this type of commission is allowed, because in some jurisdictions, it is allowed.
0 votes Thank Flag Link Sun Aug 7, 2011
Hmm NO that is not common to pay a buyers agent a commission fee. The seller pays a set commission that is agreed upon when the listing is taken and from that percentage the buyers agent gets paid. I am not sure why they would require you to pay a commission fee. I would say move on to another agent that would accept what is being paid on the listing and not expect you to pay additional. Good Luck!
Heather
0 votes Thank Flag Link Mon Aug 1, 2011
Dear Home Buyer:
NO it is not common for a Real Estate agent to charge a buyer an upfront commission in the state of California. In fact, we are discourgaged by the California Department of Real Estate from collecting upfront fees. That said, we are allowed to charge fees upfront it if we get permission from the DRE. But the fee that you are being charged may not be a commission fee. It may be an administration fee. Ask specifically what it is and whom it is being paid to.

Typically, a Real Estate Agent is paid by the Seller when the transaction results in a sale. The seller pays both the Listing Agent's commission and the Selling Agent's commission (also known as the Buyer's Agent).

Each Brokerage firm operates differently and I would interview a few agents from different firms to see which you feel comfortable working with. Yes, a Buyer Agreement signed with a Broker protects the Broker from Buyers who want to waste their time. So when you sign this type of agreement, you commit to paying that Broker a commission fee for homes that they showed you or brought to your attention but only if you purchased one of them. Before you sign, get in writing what services you will be receiving from the Broker and make sure you can stop using their service if they don't perform. Paying that commission for work done is the price you will pay for working with a smart agent who worked hard to get you what you want.

Bottom Line: You want to find someone that will help you get what you want and you want to ensure that they get paid for doing so.

Hope this helps and if I can be of service to you, let me know.

Camelia Vera
DRE 01871575
Coldwell Banker George Realty
660 West Huntington Drive, Arcadia, CA 91007
626-484-4500
0 votes Thank Flag Link Mon Aug 1, 2011
I have been hearing this question for years. Run from this situation. Do not be a mark.
0 votes Thank Flag Link Mon Aug 1, 2011
No this is not typical. Typically commission fees are paid by the seller.
0 votes Thank Flag Link Mon Aug 1, 2011
I would like to think this is some type of document processing fee to defary the cost that the franchise imposes on the agent. If there is indeed value to the client, I see no reason why one should not pay it. You should ask what is included and the agent should be able to explain in detail. Otherwise, you can ask to drop it or negotiate to a level where you find acceptable.
0 votes Thank Flag Link Fri Jul 29, 2011
I believe the fee you are referring to is an admin fee to the broker and not a commission fee. This is something that most of the large brokerages charge their clients. It does not go to the agent but to the broker. As an agent I always paid the fee myself on behalf of my clients as I was not thrilled with the thought that they were being charged this fee. It is not a problem for me now as I have since moved to a broker that doesn't charge it's clients this fee.
0 votes Thank Flag Link Thu Jul 28, 2011
That sounds like a broker admin. fee to me. My brokerage used to charge clients such a fee, but they stopped a couple of years ago. I know there are companies that still collect them though. You should ask who/what the fee is for. If it is an administrative fee, than the agent does not receive it, the brokerage does. If it is a commission fee for the buyer's agent than I refer to my colleague's comments below and give them a thumbs up.

Bottom line is that is it not unusual for such a fee to be collected to cover administrative costs.

Angie Simpson
Coldwell Banker
0 votes Thank Flag Link Thu Jul 28, 2011
Dear Home Hunter,
It seems the business might be moving in this direction due to the many issues which arise with clients and agency, particularly Buyer agency.
It's possible that we might see retainer fees being charged as is done with other professions, so that professional people are paid for their expertise and time.
0 votes Thank Flag Link Wed Jul 27, 2011
Is this a fee the agent is charging to represent you in the the buying of a home? Or is this a brokerage administration fee that their broker is charging you? Talk to your agent about what specifically this fee covers. It's becoming more common for brokers / real estate companies to charge an administration fee to buyers and sellers. Your agent doesn't profit from this fee and it isn't a part of the commission they earn from you.
0 votes Thank Flag Link Wed Jul 27, 2011
Dear Mr. Home Buyer,

Commissions paid to licensed real estate agents are entirely negotiable. Traditionally, fees are collected after a buyer or seller have closed on the sale or purchase of a real estate property. However, it is not uncommon for a buyer's agent to negotiate for an up front fee, which off sets some of the expenses that he or she will incur while representing you. More important, your agreement to pay such a fee demonstrates your committment to the process, and reassures your real estate agent that you are not merely wasting his or her time and resources.
0 votes Thank Flag Link Wed Jul 27, 2011
Search Advice
Ask our community a question
Email me when…

Learn more

Copyright © 2014 Trulia, Inc. All rights reserved.   |  
Have a question? Visit our Help Center to find the answer