Real estate agent fees come under fire

By M. Scott Carter | The Journal Record

[ NOVEMBER 23, 2009 – OKLAHOMA CITY, OK ] – Across the country, every day, people purchase homes and real estate. And, by custom, they pay the real estate professionals a percentage of the sales price.

Those percentages – many times in the range of 6 percent – are what cover the agent’s cost and expenses.

However, over the past few years, many real estate agents have added additional fees on top of the percentage charged to the buyer. Those fees, often listed as “transaction fees,” range in price from $150 to $250.

And they’re becoming controversial.

In Atlanta, the U.S. Court of Appeals for the 11th Circuit decided that a suit against a brokerage for allegedly charging a buyer a transaction fee when no service was performed could be certified as a class-action suit.

In that suit, Busby v. JRHBW Realty Inc., a buyer purchased a home using a federally insured loan and was charged a $149 “administrative brokerage commission” in addition to the commission paid to the brokerage by the seller.

But while many companies charge the fees, others don’t.

Keller Williams, a national chain of real estate companies, doesn’t charge the fee, said Florida broker Jack Bowman.

“Our agents just think that those fees are unconscionable,” Bowman said in a Web posting. “Quite honestly, if you are selling a $300,000 house, and you get a 3-percent commission, that’s $9,000, then to add a couple hundred dollars on it for paper processing? Really.”

In Oklahoma City some agents charge the fees, while others don’t.

“It’s really a decision made broker by broker,” said Judy Lindsay, board president of the Oklahoma City Metropolitan Association of Realtors.

Lindsay, who has worked with two different brokerages, said the fees are often misunderstood.

“It’s a fee for an added value,” she said. “The real estate commission requires that we keep paper files for five years. The contracts, addendums, disclosures, all those things make up a lot of files and we have thousands and thousands of files.”

To streamline the storage, Lindsay said her companies scan the documents and store them on computer.

“If someone wanted something, we could supply the public with anything they asked for, regarding their transaction,” she said. “But that does cost money. And that’s listed as an electronic data storage fee.”

Lindsay said some firms also use a closing coordinator, who makes sure each party has the proper paperwork and information.

That fee for both services is bundled together, she said, and is usually about $150.

“Technology gives us a lot of really great stuff,” she said. “But it costs money.”

She said the fees have been used for several years.

“It’s not something new,” she said. “These fees have been around for a while.”

Will Jarvis, a real estate attorney for the Oklahoma City-based Phillips Murrah law firm, said the fees are legal, provided they are disclosed.

“In my experience, it’s pretty uncommon (to charge fees) especially on the residential side,” he said. “It’s my experience that the commission is intended to cover the cost. The key is whether or not those fees are disclosed.”

It looks like, he said, the some brokers are forwarding their administrative cost to the buyer.

“Real estate contracts theoretically are between the buyer and the seller,” he said. “But what amazes me is how often the broker is a third-party beneficiary. But whatever they are it has to be disclosed prior to entering into the contact. It’s a pretty complicated issue when you sort through it.”

CLARIFICATION

This story quoted a Keller Williams broker as saying the company doesn’t charge transaction fees. While the quote was accurate, the decision to charge those fees is made by each franchisee, and in Oklahoma, some Keller Williams franchises do charge transaction fees.