I am a buyer closing on a house and my real estate agent wants me to pay an extra $295 of brokers fees. Does that usually come out of his commission?

Asked by mladish, Altamonte Springs, FL Wed Aug 31, 2011

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Annette Law…, Agent, Palm Harbor, FL
Thu Sep 1, 2011
It is a revenue augmentation strategy implemented by some brokers. To increase revenue a broker can:
1. Raise the monthly fees on each agent (some already near $1,000 monthly)
2. Increase their share of the split (some are as high at 50%)
3. Add fees to office services such as answering your phone
4. Impose referral fees on agents for calls coming into the office from office advertisements. (25%)
5 Raise desk fees ($100 mo)
6. Impose monthly 'coffee fund' charges.(loved by those agents who work from home)
Brokers have more ways to raise income than Spirit Airlines.
Many of these choices, however, make the brokerage less competitive with others in the area.
OR....the broker can
Create a fee that the agent can pass on to the consumer. It is the broker's way of saying to the agent, "I didn't raise your taxes."

The real estate agent must choose, pay the fee directly to the broker or pass the fee to the buyer or seller. With agents incomes dropping more than 60% in the past 4 years, no reductions in fees, each transaction requiring 3 or 4 times the effort of previous years, it is easy to realize the agent is no longer able to cover this expense.

Do the math. If I sell a $35,000 retirement condominium with a co-operating agent, my income will barely cover this fee! It becomes an increasingly difficult situation for low end properties to get sold. No one wants to work harder and lose money. In some locations and instances, there are fees the consumer doesn't see that agents levy against each other, perhaps to rake back fees they are compelled to pay.

Based on each situation, I must determine to whom I will or will not pass the fees forward. Do any agents like this situation. NO. Unfortunately, changing brokers can cost more than $10,000! That's a lot of broker fees.

It's an exciting time to be in real estate.
By the way, congratulations on finding a new home.
Doing the right thing is the best way to get on with your life in your new home.
2 votes
I was going to write a response to this question but this is well put. The only thing I would add is mentioned in the comments below that this fee should be disclosed up front.
Flag Mon Dec 2, 2013
Antonio Vega…, Agent, Saint Cloud, FL
Wed Aug 31, 2011
In order to legaly collect that fee your agent must have given you some disclosure paperwork to sign from the Realty Company, and the fee must be disclosed in it. Real Estate companies charge that money to pay for their overhead and name it things like: document storage, store front fee, in house file processing, etc.

If you refuse to pay the fee the agency will deduct it from the agents commision which I believe is wrong. So if you have received great service from your agent pay for it and don't hold it against them. Learn your lesson and next time ask first and then choose to work with a realty "Brand" that does not have extra fees. It is usually the big name companies...which want you to think the "Brand" gave you service when in truth is the agent who does, no matter if he comes from mom and pops realty.

Tony Vega
Charles Rutenberg Realty
(Let your frineds and family know -We charge no extra fees)
2 votes
Mott Marvin…, Agent, Sunny Isles Beach, FL
Wed Aug 31, 2011
If you did not agree to pay this fee on the outset of your relationship with the agency. I would refuse to pay. This fee known as a processing fee or transaction fee really is inappropriate under most circumstances.

Lenders were notorious for adding fees later known as "junk fees". On your closing statement, each and every related cost is itemized. Ask what the "brokers fee" is all about. Perhaps they wish to waive the commission in favor of the "brokers fee"

Mott Marvin Kornicki, Broker
8811 Harding Avenue | Surfside, Florida 33154

786-229-7999 Cell-Text
info@waterwaysrealty.com ≈ E-Mail
1 vote
Mark LeMenag…, Agent, Lake Nona Orlando, FL
Wed Aug 31, 2011
It's a pretty normal practice and will depend on wether or not you agreed to it in writing when you wrote up the offer. If you have never agreed to this fee in writing, then tell your agent to go jump in a lake. If you did agree in writing, then it's time to pay.

I can say that everytime I do a new contract, the title company asks me two questions -- my buyers contact details and if my broker charges the buyer a fee. If I get asked this EVERY time, that's a pretty good indication that it is a normal practice.
1 vote
Radinka Ilsi…, Agent, Lakewood Ranch, FL
Wed Aug 31, 2011
Caroline is correct, this is something the Broker charges as a transaction fee. If you do not pay it, then the realtor will have to pay the broker for it, it is not a commission that the agent receives. Most brokers have a standard disclosure that you would sign at the time of contract signing disclosing this and any other fees.
1 vote
Senswella Mi…, Agent, Altamonte Springs, FL
Sat May 25, 2013
It is a normal fee; however, you Realtor should have disclosed that information on your first initial meeting. It can and can not come out of commissions it depends on your relationship with your Realtor, but I would have to agree if you have received outstanding sevice from your Realtor just pay it. You will have what you want which is a beautiful home and a relationship for a lifetime. Most Realtors have fees to pay as well. At least you know for the next go around what questions to ask.

Good Luck and Congratulations!
0 votes
Bill Eckler, Agent, Venice, FL
Tue Apr 24, 2012
Processing fee, junk fee, or @$#^&@ ....it is fairly common practice but some agencies agree with you and feel it a slap in the face to the customer that is all ready getting socked from many directions.

As mentioned, refusing to pay this fee will likely cause this responsibility to fall in the lap of your agent. If people did more than question this policy and flat out resisted.....perhaps the message would be heard. Our company does not charge these processing fees.

0 votes
Irina Karan, Agent, Aventura, FL
Tue Apr 24, 2012
You were supposed to be informed of any fees involved in your purchase. If you were not,
you should not be paying this fee.

Good luck,

Irina Karan
Beachfront Realty, Inc.
0 votes
Alan May, Agent, Evanston, IL
Thu Sep 1, 2011
As many have already answered, unless you agreed to pay this fee at the outset, you should not pay it.

It doesn't matter whether it's a transaction fee, a revenue augmentation fee (I like that phrasing, Annette, thank you for that), or a junk fee... and it doesn't matter if it normally comes out of your agent's commission, or whether it's normally charged to the buyer. Unless you were informed about it prior to the transaction... sorry, you should just refuse to pay it.
0 votes
Scott Hulen, , 64068
Wed Aug 31, 2011
It has to be disclosed upfront. It is a common fee and my personal policy is if this was a full price transaction / commision I would pay the fee. If discounts are given in reguard to my commisions then I would not pay the fees. My personal feelings about broker admin fees are mixed on one side blame the federal goverment in reguard to more rules reguarding document storage on the flip side how much does it cost to store documents in the electronic format.
0 votes
Danielle Sha…, Agent, Cape Coral, FL
Wed Aug 31, 2011

I used to work in an agency state (Michigan). A transaction broker has no duties to any party - just the transaction. Fair and honest dealings are required but there is no fiduciary relationship with buyer or seller.
0 votes
Andy, , California
Wed Aug 31, 2011
I heard FL is called transaction broker state which is diffrent from agency state. What is the diffrence?
0 votes
Danielle Sha…, Agent, Cape Coral, FL
Wed Aug 31, 2011
All the smart people below are absolutely correct in stating that this should have been disclosed before even looking at a property, let alone signing a contract. If this is not something that was discussed from the outset then you are not obligated to pay it. Too bad for your agent since their office will most likely deduct it from their commission.
Web Reference:  http://www.mysharphomes.com
0 votes
allan erps,A…, Agent, Pearl River, NY
Wed Aug 31, 2011
Agree, this should have been disclosed! The $295 is a fee that has never been charged by my company or most here. Have heard of one prominent company that does put that fee "into the mix" and does creat a few problems at the closing table
0 votes
Lisa Hill, Agent, Winter Park, FL
Wed Aug 31, 2011
I have worked for three brokers ranging from a very large well known company to small independent companies and each one has charged a fee. I disclose it on the Buyer/Broker Agreement my buyers sign. It must be disclosed to you before it can be included on the HUD statement.
0 votes
Cathy Sloan, Agent, Jacksonville, FL
Wed Aug 31, 2011
The fee is standard in North Florida. It ranges from $150 to $495 depending upon the brokerage. It is a Brokers fee that use to be called a Transaction Fee. It now must be called a Brokerage fee and it also must be disclosed to the Buyer or Seller prior to closing. You should have signed something disclosing this fee at the time you presented your offer to purchase. If you did not sign anything acknowledging the fee prior to closing you can requet the fee be waived.

Chances are the fee is listed on the offer you signed and submitted to puchase the home and the title company charged it to you to balance the Hud to the contract you signed.

Antonio is correct. If the agent failed to properly disclose the fee or you are refusing to pay the fee, the broker may grant permission to remove it from your Hud statemen. However your agent will have to pay the fee to the broker.
Web Reference:  http://move2jacksonville.com
0 votes
Abu Musa, Agent, New York, NY
Wed Aug 31, 2011
HI Mladish,
I am answering your question from New York.In New York seller only pays commission that agreed to. which is mention in the listing agreement.In your situation ask your real estate attorney most probably you will get the answer.Good luck.
0 votes
Caroline Choi, Agent, Los Angeles, CA
Wed Aug 31, 2011
Hmm ... it sounds like a transaction fee that the brokerage is charging both their buyer and seller clients. Some agents pay this fee for their clients since it's a mandatory fee from the brokerage. Others ask their clients to pay - it really depends. This is not a fee that usually comes out of the commission, but does need to be dealt with since this brokerage assesses this charge. If you're not willing to pay it, talk to your agent about it and see how you two can work it out. Good luck, Caroline
0 votes
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