Real Estate Agents - Transaction fees

Author

Transaction fees

Dan Homan

2007-01-06, 8:25 pm

Hey,

Here is a question to kick around. In my area all the brokers charge
"transaction fees" or "document storage fees" or "regulatory compliance
fees" to both buyer and seller at closing. Some brokers disclose this to
sellers in the listing contract, most do it in a more subtle way - for
example as a line item on the seller's net sheet. For buyers some disclose
this as an item buried in a sheet listing home inspection, survey, mortgage
points and other "possible" closing costs. Others do not have buyers sign
anything except the contract that says the seller will pay all brokerage
fees involved in the transaction.

Gee, didn't they teach these morons that as brokers they have to store the
documents of prior transactions for so-many years (depending on your state's
law) as part of your duties and normal cost of business as a broker? I have
had several clients offer to rent a safe deposit box to keep the file in
because it would be cheaper than the broker's junk fee.

Either way as buyer or seller I would tell the broker to stick the fee where
the sun don't shine. This leads to my question. If a buyer or seller
refuses to pay this either undisclosed or poorly disclosed junk fee, the
brokers in my town charge the agent, even if there is nothing in writing
between the agent and the broker or the customer/client and the broker. My
understanding is that if the buyer/seller does not pay this junk fee the
only one who can go after them for the money is the broker, who dollars to
donuts takes the money from the agent's commission rather than pursue the
customer/client. My question: absent a written signed agreement between
broker and agent can a broker legally charge an agent for the unpaid
expenses of an unrelated third party? Do agents who have had to grab their
ankles in this matter have any recourse in this - I know they would have to
find another broker at the very least - and since big brother is only
looking at commissions, once an agent gets a judge to say give him his money
back to a broker that agent will never work in that town again (I guess
anti-trust laws don't apply here as the penalties on this would be too low
and too low profile for the government to pursue).

I personally find these fees repugnant and they demonstrate the ethical
bankruptcy of the brokers that charge them. If the brokers want their money
so bad, let them go after the clients and customers in a legal and
professional manner rather than using strong arm intimidation techniques to
steal it from the agent who made the mistake of listing or selling to
informed buyers and sellers who actually look over their HUD forms before
closing.

Give me your thoughts.

homeowner911@gmail.com

2007-01-11, 1:25 pm

In our company, the fee isn't just for document storage, but pays the
hourly wage of a dedicated person (Compliance Coordinator) who
specializes in keeping the file in compliance, make sure all diclosures
have been signed and collected properly, input or scan to electronic
media store and finally output CD copies to the client and agents as
well as paper backups. This person answers no phones or handles no
other office work. This is the person who if after the deal closes a
document is missing a signature goes about tracking down signatures
when everybody wants to forget about it. This person also has no
additional duties except working on the 30+ deals we close per month.

Agents are notorious for not knowing their paperwork. New agents learn
as they go. Experienced agents with teams usually have transaction
coordinators who are covering ALL aspects of the closing on top of the
paperwork. That agent him/herself doesn't care or have the time to make
sure the paperwork is correct. They are usually pressing flesh to flesh
and rainmaking.

I don't know about you, but its a very important job and yes the fee is
charged per transaction. Nobody is getting rich from the fee. In our
SoCal Market, we charge $175-$200 (condos) on Buyers side and $250 for
seller side. Dual Agency sales are $300 split 50/50 between buyer and
seller at close of escrow in all sizes of home from the median of $540k
to the homes sold over $2 million dollars. Junk fees are designed to
earn a profit off from non-specific services. And I'm sure some
brokerages charge these fees with no intention of having a compliant
brokerage..I don't know, that's not us.

Agents are told that if they don't inform clients (buyers and sellers)
upfront about the costs involved in the transaction, then yes they will
be charged for it. They are required to notify the client in advance,
at listing contract and THEN any negotiations on expenses can be taken
to the broker. If the client objects, our broker has the choice, in
light of other aspects of the deal to waive or discount the fee. Agents
are only charged if we are at a final HUD and the client refuses to pay
it then. The agent's forgetfulness could jeapordize the deal during the
final crucial days.

Most brokerages have an application and/or state Realtor organization
Broker/Independent Contactor Agreement. It is there that we inform the
agent of their duties to inform the client upfront about the fees. It
is also in an insert in their hiring pakage that is signed off on. It
is also in the policy manual. It is also on our custom disclosures to
the client when they sign the listing agreement. It is also included in
the seller/buyer net sheet.

It's fairly easy to explain the upfront costs to our clients, and quite
frankly we have had ZERO objections to paying it when we explain the
compliance coordinator's job and that it is "...another layer of
outstanding service from our team that continues beyond their closing".
And its true. If the agent doesn't tell the client about an upfront
appraisal, and the client backs out or refuses to pay, they will be
charged. If the agent doesn't inform the client about the home
inspection that's paid upfront, and the client refuses to pay, the
agent will be charged. Sorry but these are transaction mistakes that
are costly and avoidable.

You can say that if the agent or transaction coordinator had done their
job with their documents and disclosures then this wouldn't be needed,
but this position for us is mainly about redundancy and ensuring our
licensed is not in jeapordy over paperwork issues.

Anyway, that's our take down here in sunny socal. We are in compliance,
we aren't "ethically bankrupt", and we train our agents on many ends
how we want things done. If agents refuse to inform, forget to inform
or are scared of introducing the costs involved in closing the
transaction, then they are culpable.

On Jan 6, 7:41 am, "Dan Homan" <dho...@cfl.rr.com> wrote:
> Hey,
>
> Here is a question to kick around. In my area all the brokers charge
> "transaction fees" or "document storage fees" or "regulatory compliance
> fees" to both buyer and seller at closing. Some brokers disclose this to
> sellers in the listing contract, most do it in a more subtle way - for
> example as a line item on the seller's net sheet. For buyers some disclose
> this as an item buried in a sheet listing home inspection, survey, mortgage
> points and other "possible" closing costs. Others do not have buyers sign
> anything except the contract that says the seller will pay all brokerage
> fees involved in the transaction.
>
> Gee, didn't they teach these morons that as brokers they have to store the
> documents of prior transactions for so-many years (depending on your state's
> law) as part of your duties and normal cost of business as a broker? I have
> had several clients offer to rent a safe deposit box to keep the file in
> because it would be cheaper than the broker's junk fee.
>
> Either way as buyer or seller I would tell the broker to stick the fee where
> the sun don't shine. This leads to my question. If a buyer or seller
> refuses to pay this either undisclosed or poorly disclosed junk fee, the
> brokers in my town charge the agent, even if there is nothing in writing
> between the agent and the broker or the customer/client and the broker. My
> understanding is that if the buyer/seller does not pay this junk fee the
> only one who can go after them for the money is the broker, who dollars to
> donuts takes the money from the agent's commission rather than pursue the
> customer/client. My question: absent a written signed agreement between
> broker and agent can a broker legally charge an agent for the unpaid
> expenses of an unrelated third party? Do agents who have had to grab their
> ankles in this matter have any recourse in this - I know they would have to
> find another broker at the very least - and since big brother is only
> looking at commissions, once an agent gets a judge to say give him his money
> back to a broker that agent will never work in that town again (I guess
> anti-trust laws don't apply here as the penalties on this would be too low
> and too low profile for the government to pursue).
>
> I personally find these fees repugnant and they demonstrate the ethical
> bankruptcy of the brokers that charge them. If the brokers want their money
> so bad, let them go after the clients and customers in a legal and
> professional manner rather than using strong arm intimidation techniques to
> steal it from the agent who made the mistake of listing or selling to
> informed buyers and sellers who actually look over their HUD forms before
> closing.
>
> Give me your thoughts.

Fred

2007-01-20, 9:25 am

All the offices in our area charge this fee. Our state regs require us
to disclose this fee up front, in either the listing contract or the
buyer's agency contract, and it is part of the agreement with the
buyer/seller. The state (PA) has specified that all fees are
negotiable. If you don't agree with it, negotiate it out of your
contract, and if someone tries to slip it in at the last minute, you
can refuse to pay it (at least in my state).

The PA Real Estate Commission specifies that this cannot be billed as a
"regulatory compliance fee". One thought is that they don't want you to
know what they're costing you, the other is that this fee is just
another revenue stream and adding the fancy name to it makes it less
negotiable. The commission want to make it very clear to all consumers
that everything is negotiable in real estate.

The fees are not a sign of "ethical bankruptcy". If someone tries to
slip them in at the last minute without disclosing them before the
contracts are signed, THAT is "ethical bankruptcy". Any agent worth
their salt knows up front these fees, and will make their client aware
of them.

On the agent side, your broker can charge you the fee. Even if contract
law was on your side, by the time you fight this, you will be too deep
in the hole. Personally, I will often waive the fee to my clients
(negotiate it away), and pay it out of my own pocket. Any agent should
be aware that this is one more cost they face and include that fact in
their negotiations.

On Jan 11, 11:28 am, "homeowner...@gmail.com" <homeowner...@gmail.com>
wrote:[color=darkred]
> In our company, the fee isn't just for document storage, but pays the
> hourly wage of a dedicated person (Compliance Coordinator) who
> specializes in keeping the file in compliance, make sure all diclosures
> have been signed and collected properly, input or scan to electronic
> media store and finally output CD copies to the client and agents as
> well as paper backups. This person answers no phones or handles no
> other office work. This is the person who if after the deal closes a
> document is missing a signature goes about tracking down signatures
> when everybody wants to forget about it. This person also has no
> additional duties except working on the 30+ deals we close per month.
>
> Agents are notorious for not knowing their paperwork. New agents learn
> as they go. Experienced agents with teams usually have transaction
> coordinators who are covering ALL aspects of the closing on top of the
> paperwork. That agent him/herself doesn't care or have the time to make
> sure the paperwork is correct. They are usually pressing flesh to flesh
> and rainmaking.
>
> I don't know about you, but its a very important job and yes the fee is
> charged per transaction. Nobody is getting rich from the fee. In our
> SoCal Market, we charge $175-$200 (condos) on Buyers side and $250 for
> seller side. Dual Agency sales are $300 split 50/50 between buyer and
> seller at close of escrow in all sizes of home from the median of $540k
> to the homes sold over $2 million dollars. Junk fees are designed to
> earn a profit off from non-specific services. And I'm sure some
> brokerages charge these fees with no intention of having a compliant
> brokerage..I don't know, that's not us.
>
> Agents are told that if they don't inform clients (buyers and sellers)
> upfront about the costs involved in the transaction, then yes they will
> be charged for it. They are required to notify the client in advance,
> at listing contract and THEN any negotiations on expenses can be taken
> to the broker. If the client objects, our broker has the choice, in
> light of other aspects of the deal to waive or discount the fee. Agents
> are only charged if we are at a final HUD and the client refuses to pay
> it then. The agent's forgetfulness could jeapordize the deal during the
> final crucial days.
>
> Most brokerages have an application and/or state Realtor organization
> Broker/Independent Contactor Agreement. It is there that we inform the
> agent of their duties to inform the client upfront about the fees. It
> is also in an insert in their hiring pakage that is signed off on. It
> is also in the policy manual. It is also on our custom disclosures to
> the client when they sign the listing agreement. It is also included in
> the seller/buyer net sheet.
>
> It's fairly easy to explain the upfront costs to our clients, and quite
> frankly we have had ZERO objections to paying it when we explain the
> compliance coordinator's job and that it is "...another layer of
> outstanding service from our team that continues beyond their closing".
> And its true. If the agent doesn't tell the client about an upfront
> appraisal, and the client backs out or refuses to pay, they will be
> charged. If the agent doesn't inform the client about the home
> inspection that's paid upfront, and the client refuses to pay, the
> agent will be charged. Sorry but these are transaction mistakes that
> are costly and avoidable.
>
> You can say that if the agent or transaction coordinator had done their
> job with their documents and disclosures then this wouldn't be needed,
> but this position for us is mainly about redundancy and ensuring our
> licensed is not in jeapordy over paperwork issues.
>
> Anyway, that's our take down here in sunny socal. We are in compliance,
> we aren't "ethically bankrupt", and we train our agents on many ends
> how we want things done. If agents refuse to inform, forget to inform
> or are scared of introducing the costs involved in closing the
> transaction, then they are culpable.
>
> On Jan 6, 7:41 am, "Dan Homan" <dho...@cfl.rr.com> wrote:
>
>
>
>
>
>
>
>

Dan Homan

2007-01-20, 9:25 am

"Fred" <rehhausser@gmail.com> wrote in message
news:1169292675.483336.89870@q2g2000cwa.googlegroups.com...
>
> All the offices in our area charge this fee.

My question was about the ethics (not code of ethics - but real ethics - the
moral charichter and integrity) involved in charging these junk fees. Do
you tell your kids "just because everybody does does not make it right?"
The problem is that agents do not have the onions or clout to tell their
brokers. You notice the so calles Realtor code of ethics makes no mention
of the way brokers are supposed to treat their agents. That is because the
NAR is broker run and agent funded. A brokers' trade association that is
paid for by the folks they want to kiip in line.

Our state regs require us
> to disclose this fee up front, in either the listing contract or the
> buyer's agency contract, and it is part of the agreement with the
> buyer/seller.

Say what? No wonder there are so many FSBOs. I really have a lot of
trouble with the attitude "if we disclose it it is OK." The fact is in most
states the buyer disclosure says the seller pays the commission and the
broker junk fees are burried in with the "possible closing costs" and made
to look like a title company fee or a mortgage company fee. For sellers,
they pay so much time negotiating the commission down that by the time most
agents get to page 600 of the listing papers that "discloses" it in fine
print, they are so zoned out they will sign anything.

The state (PA) has specified that all fees are
> negotiable. If you don't agree with it, negotiate it out of your
> contract, and if someone tries to slip it in at the last minute, you
> can refuse to pay it (at least in my state).

So buyer and seller who are super alert, and actually catch the agent
slipping these fees in with minimum disclosure can ask the agent to take
these abusive fee out of the mix? Many agents tell buyer and seller these
fees are non negotiable because their broker will charge them if they do not
have the seller or buyer pay.

> The PA Real Estate Commission specifies that this cannot be billed as a
> "regulatory compliance fee". One thought is that they don't want you to
> know what they're costing you, the other is that this fee is just
> another revenue stream and adding the fancy name to it makes it less
> negotiable. The commission want to make it very clear to all consumers
> that everything is negotiable in real estate.

Isn't that cute? Even the government is aware that brokers will try to
blame them for charging a junk fee. Why can't brokers just be honest and
say "you negotiated hard on the commission mr seller, but we are going to
charge you more anyway?" Oh, I know why, because then the sellers would see
they are being ripped off.

> The fees are not a sign of "ethical bankruptcy". If someone tries to
> slip them in at the last minute without disclosing them before the
> contracts are signed, THAT is "ethical bankruptcy". Any agent worth
> their salt knows up front these fees, and will make their client aware
> of them.
>
> On the agent side, your broker can charge you the fee. Even if contract
> law was on your side, by the time you fight this, you will be too deep
> in the hole.

Hey dude! Read the last paragraph again and tell me this is not a
demonstration of "ethical bankruptcy" on the par of the broker. If the
broker has a contract from a seller and the seller signed off on the fine
print disclosure, wakes up when he receives his HUD the day before closing
and tells the agent we are not closing if he is charged these fees. What
would your broker say if he got a call from the seller, the buyer, the
buyer's agent, and the other broker that it is not closing because you (the
seller's agent) said "OK, if you don't pay this fee we just won't close the
transaction." Your broker would rip you a new one, and then after you waved
the fee he would charge it against your commission all the while kissing up
to the seller. Sorry, charging the agent for a customer or client item, and
not using due diligence to collect that money from the appropriate party is
unethical, immoral and just wrong.

Personally, I will often waive the fee to my clients
> (negotiate it away), and pay it out of my own pocket. Any agent should
> be aware that this is one more cost they face and include that fact in
> their negotiations.

So lets all roll over and play dead? What brokers are doing is just plain
wrong and unethical, why not discuss it? If agents stopped acting like a
bunch of sheep lead to the slaughter, and stood up to the brokers, maybe
ethics in the industry would change. But I guess it is easier to shell out
the bucks to the broker than to demand the broker take action against the
right party. Any attorneys lurking out there? This would be a great class
action suit.

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