by Sean, Broker and Manager
In our last post we focused on the conundrum posed by a (in our opinion) crazy buyer. The buyer didn’t want to use a Realtor and why wouldn’t you use a Realtor when services to a buyer are normally free?
Well, sometimes buyer services aren’t free.
Some companies, definitely NOT us, charge the buyer a “transaction fee” or other bulls**t fee on the back end. Basically the agent takes the person around and then when the buyer writes a contract he or she also signs a disclosure that says there will be a transaction fee at closing. Most buyers just sign the paper. The fees can range anywhere from $200 to $600 in this market.
To be fair to agents, agents hate these things. It’s the companies that mandate them, and if the agent wants to work for the company he has to charge the transaction fee (which goes to the company only).
To be fair to the companies, there really is a good reason for them. In a business where it’s difficult to predict income (because income is based on a percentage commission in markets where prices rise and fall), if you can at least predict unit sales you can predict income from a fixed transaction fee.
This summer the Federal government took a look at these fees and basically said you can’t charge them anymore, at least not the way they’ve been done in the past, which is on the settlement statement at closing. The Fed said if the fee isn’t actually tied to an actual closing “thing” (like title work is), you can’t charge it.
Some brokerages have now dropped the fee from the buyer side. But they’re still finding a sneaky way to hit sellers with it. In some instances it has been re-named a “broker only commission.” Essentially it’s a second commission. And again, agents are forced to sell it.
A good Realtor friend of mine always says, “Pigs get fat, hogs get slaughtered.” Words to live by, I think.