• Tweet
• Email
• Sharebar

• Tweet
• Email

" I am stunned, amazed, in shock, surprised, aghast, and stupefied.

Stupefied, not stupid.

I just saw a HUD 1 closing statement that had a new one for me. A buyer had been persuaded by a Coldwell Banker agent to pay a $295 fee to Coldwell Banker for, “Back Office Costs”."

Written on August 12th, 2006 in Buying Exposed by Larry Cragun  Read:  Now this is audacious

The type of fee Larry finds so shocking is common here in the Twin Cities.  I have seen them as high as $350, they are called broker administration fees, broker commissions and back office fees.  They are attached to most real estate transactions and paid by the consumer.  The money does not go to the REALTOR.  It goes to the real estate company. 

Real estate companies also receive a portion, up to 50%, of every commission their agents charge. In addition they charge agents desk fees, technology fees, institutional advertising fees and the list goes on.  Most agents, like me, are independent contractors, not employees. We work on a 100% commission basis and get paid only when a sale closes.  I suspect they can’t charge us any more than they do now so they turned to the consumer.  Even though home prices have gone up real estate companies raise the fee they charge consumers, and REALTORS almost every year.

Buyers and sellers who sign a buyer representation contract or a listing contract with a REALTOR will find wording on the contract stating that there will be a separate fee in addition to any commissions.  The fee is almost always due at closing.  Buyers and sellers should never be surprised by this or any other fee during the closing. Fees and all other conditions should always be discussed at the time the contracts are signed.

Fees are negotiable.  Buyers and sellers who do not wish to pay an administrative fee should say so.  If the fee seems "audacious and stupefying" don’t sign the contract, or negotiate a lower rate or no fee at all.  It is that simple. 

In the example sited on the RealEstateUndressed blog I suspect that the REALTOR explained the fee and the buyer read and signed the contract.  All was well until someone saw it on the closing documents and decided to be outraged. 

By the way I love larry’s blog, bugs and all!