Home Buying in San Francisco>Question Details

Renee, Home Buyer in San Francisco, CA

Administrative Transaction Fee, Risk Management Policy - who pays for these?

Asked by Renee, San Francisco, CA Mon Sep 1, 2008

Our realtor has asked us to pay these fees, which were not in our original signed agreement (we were given an addendum with these fees and a list of benefits we can get from them - most of which we have covered by our family in-house real estate/finance/legal team, plus legal benefits through work. Is this a normal fee for us, or would this normally be covered within the broker's commission, or...?

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I think you need to look deep into your Realor/Agents eyes and calmy say, "I'm sorry, all fees were agreed to in prior negotiations" and then shut up. If they give you any more grief then I'd ask, "So,are we now re-opening negotiations as to listing term, commissions, price also?" Then once again be quiet. If you get the big, "but..," then firmly ask the last question again and get either a yes or no. If they say yes, then you can start with their brokerage fee and lower it, shorten the term for the listing (like to this afternoon at 6:00pm!!), etc. If NO, then once again state, " I'm sorry, all fees were agreed upon in prior negotiations." and just smile.
3 votes Thank Flag Link Mon Sep 1, 2008
In short, your agent will probably be making well over $10,000 on this transaction. They really have some nerve asking you to cough up a few hundred dollars from the proceeds of your investment to pay for these dubiously added on items. Do not pay it and if they force the issue ask to speak with the managing broker of their office. Do not let them bully you into it.
Web Reference: http://www.SchwabeHomes.com
0 votes Thank Flag Link Sat Sep 6, 2008
Scott,

Two words--SPELL CHECK!!
0 votes Thank Flag Link Mon Sep 1, 2008
Hi Renee;
I agree with the other agents. Usually these fees come out of my own pocket, not my client's. Though there are certainly many models for different agencies out there. I think it is a little unusual to spring this on you in an addendum without talking about it when you were first talking about working together.
But, as I said, there are many different models out there.
0 votes Thank Flag Link Mon Sep 1, 2008
This is not a normal fee!!! Normal realtors do not charge this. As a realtor you do not add the cost of busines sto your comkission and pass on fees to a seller or a buyer. You may be seeing one of these new pay as you go realtors or a discount broker that has a fee list of what they offer and what the charge for it. Dont try to save a couple of dollars on the biggest transaction in onbe's life. Use a full service realtor and get full service with no added fees. If it wasnt part of you listing agreement, you do not have to pay it. good luck Renee
Web Reference: http://www.ScottSellsNH.com
0 votes Thank Flag Link Mon Sep 1, 2008
How much are we talking, a few hundred dollars?
0 votes Thank Flag Link Mon Sep 1, 2008
Hi Renee,

I think the essence of your question has to do with being asked to pay costs outside the terms of your agreement. In terms of the fees themselves, it sounds like the agent is trying to recoup costs associated with transaction coordination and errors and omissions insurance.

It's not unusual for agents to pursue coverage of these kinds of costs. Agents do bare costs in order to conduct business, but these things must be negotiated up front and included in any agreement you make. If they were not, then I don't see how you could be held liable to them. What's more, I wonder what your impression is of the agent after he/she sprung this upon you? That's the part that seems irregular to me!

Why didn't they explore this with you before you made an agreement? I hope you'll let the agent know how you feel about it.

Take care!

Jason Chapin
Urban Bay Properties
0 votes Thank Flag Link Mon Sep 1, 2008
Dear Renee,

These are not normal fees. Some companies have started charging transaction fees to help offset the costs of their Transaction Coordinators, but I feel they are not needed and should not be paid by the Buyers. Risk Management Policy is a new one to me and I have been in the business for 19 years. I suppose that refers to Errors & Omissions Insurance which we all pay and asking you to pay a share of it is not the way to go in my opinion. When you say your "original signed agreement" were you referring to a Buyer's Agent Agreement? I do not use them so I cannot assist you there. If you were referring to a Purchase Contract, those two items are definitely not in the Contract. Since you do not want to pay, I would just say no thanks.

Good luck,
Sally
0 votes Thank Flag Link Mon Sep 1, 2008
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