In most cases buyers do not pay a buyers agent a commission. The seller pays the commission and the buyers agent receives a portion of it as payment for his or her work. Here in Minnesota, real estate commissions are always negotiable.
Most local real estate companies charge some kind of a broker commission that is above and beyond the commission paid by the seller. These range from $199 to $475 and are paid at the closing. The amount being charged is stated in the listing contract that seller sign and on the buyer representation contract that buyers sign.
The money collected through these fees goes back to the real estate company. At one company if the agent can not collect it from the buyer or the seller the money is taken out of his or her commission check.
This fee should be pointed out to buyers and sellers when they sign contracts with real estate agents. The fee is listed as a commission and as such is always negotiable.
Please read contracts carefully and look for this fee. Often buyers or sellers don’t notice it until they get to the closing. Ask your agent to point it out to you on the contract.
Related Post: Audacious Fees
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I guess this is what happens when the commission percentage gets pushed down. The fee helps to breathe some profitability back into the deal.
You would think that the commission would include everything. I guess not.
I have yet to see these fees in our local market place, but am always astounded when I read these types of stories. My reaction hasn’t changed – “they get away with these fees?”
Athol – I might not be understanding your comment completely. This might sound wrong of me but I don’t see brokerage profitability as anything my buyers should have to worry about and can think of many ways to increase brokerage profitability by taking advantage of technology. The firm with the highest brokerage commission in St. paul still uses carbon forms. With thousands of agents having them use electronic forms would save a small fortune and be better for the environment. All businesses have to be profitable and if they charge too much but do not present a value proposition the makes the expense seem worth it to the consumer they lose business.
These kinds of fees are prohibited in my area. Flat fee or percentage of sale price, but not both.
Teresa, Are you talking about the admin fees charged by brokerages?. The representation contract we use from the Minnesota Association of REALTORS does not have the clause you have copied above. Our company uses an addendum to the contract that explains the admin fee and its purpose. It makes the admin fee hard to miss or ignore. It truly needs to be disclosed up front! I don’t like surprises at the closing table! The fee amount varies from company to company as well. My company is one of the ones that charges me if the consumer does not pay it.