by Sean Hess (www.SeanHess.com), Broker and Manager for St. Augustine Team Realty (www.StAugustineTeamRealty.com). Follow us on Facebook.
Line 89-Extra Commission on Standard Florida Contract
If you want to see something ugly, just take a look at line 89 (a) of the standard Florida Association of Realtors Listing Contract pictured to the right.
The first part of line 89 (a) is normal…it spells out the commission percentage in the listing agreement. Whether you love commission or hate commission, it’s how deals get done. But then it goes on to add “plus $___________ ” .
This tiny little addition in the contract is there to charge you an extra commission. If someone tries to get you to pay an extra commission, like Nancy Reagan famously said, “Just Say No.”
Back in the days of the boom market some real estate agencies felt that they weren’t raking in enough cash. There were some real world reasons for this: commission percentages were declining a bit due to market competition, and to attract agents companies had to give the agents a better cut. So they invented something called a “transaction fee” which was basically just an add-fee of a few hundred bucks that the seller and buyer got hit with at closing, and that was paid directly to the borkerage. Some people would protest the fee but most people just went ahead and closed.
Then the federal government stepped in and said, “you can’t do that,” because the fee wasn’t part of any real work directly related to a real estate closing. So the real estate agencies have to put it in the actual listing contract now.
My best advice is: don’t agree to any Extra Commission. Any company that would turn down your listing because you won’t pay a few hundred bucks is not making sound business decisions. AND, the listing agent and the agent who brings the buyer don’t see any of that money anyway, so it bypasses the purpose of commission…which is to motivate agents to do all the work in selling the home without getting paid a single dime upfront, or at all, until the house closes.