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Buyer: “I was going over the final HUD statement and I see here that there is $150.00 for a brokerage fee, can you explain what that is for and why I am paying for it?”
Agent: “I am not sure, let me ask my broker….no one has ever asked about it before…it is just one of those things people just pay”
Agent: “I asked my broker and he said it is for things like paper and ink for the contracts…”
Buyer: “$150.00 for ink and paper? Take out the $150.00 and I will print out my own forms with my own ink. I refuse to pay the $150.00.”
Agent: “In all my years as an agent that fee has always been paid, both sides always pay it”
Buyer: “Then I will be the first person not to pay it”
As someone who always thinks of the best possible comeback or response well after the conversation has ended, I was thrilled with this actual conversation the first time I came to a new real estate market (I was the Buyer). To find that the norm was to pay fees that not too many could explain was criminal. The consumer is inundated with paperwork right before signing a series of pages that tie them to a large debt for the next 15-30 years. The buyers are thinking about $100k + worth of forthcoming debt and not the $150.00 covertly inserted with an ambiguous phrase like “broker fee”. Shame on all those brokers who take advantage of their clients in this way.
A recent article in Realtor magazine highlighted a recent class action law suit [Busby v. JRHBW Realty Inc. (d/b/a RealtySouth)] that prohibits “unearned” fees. I have seen this abused within the industry by companies who claim they are acting as agents for their clients with a fiduciary responsibility to act ethically and in their clients best interest yet charge fees that the courts rule that it did not “benefit clients”.
The negative general perception of the consumer is only reinforced with activity like this. The good news is that those of us who have never charged a junk fee like this can set ourselves apart as really putting our client’s interest before our own.
We also pay for our own ink.