This is a topic that I’ve been meaning to write about for a long time, though never got around to it. But now that the Tribune (via the Washington Post Writers Group) has broken the ice on this subject, I’m ready to chime in: Administrative fees, levied on home sellers by some real estate brokerage firms, over and above the negotiated commission.

Let’s face it, in our daily lives, we are surrounded by companies who charge us all kinds of ancillary fees for services, over and above their main product or service. For example, withdrawing cash from the ATM-machine of a bank that you don’t have a banking relationship with, will debit your account with a nominal (some say outrageous) fee. Or, ordering tickets for a musical event will incur a hefty “convenience” fee on your credit card bill. Pay your parking ticket late by a day, and your fine will double. Apply for a mortgage, and if you don’t shop around carefully, you’ll get hit with a bunch of meaningless junk fees. The point is, fees are all around us, and we try to dodge them as best as we can. Some of them are justified, some are ridiculous, and then again, some are just plain excessive.

Which brings us to what the Tribune article refers to as “add-on brokerage fees”. What I’m about to write, is merely a reflection of my own opinion, and not that of the brokerage firm I’m associated with. Although I’m fairly certain that RE/MAX won’t have a problem with my opinion on this, because their whole business model rests on empowering their real estate professionals from A to Z throughout any business dealing with clients (that’s btw the main reason Christina and I are RE/MAX associates). But I digress.

The last brokerage firm we were associated with, a year and a half ago, introduced administrative fees at some point, claiming that they couldn’t keep up with operational expenses any longer (in hindsight, it turns out they introduced them for a completely different reason, but that’s a whole different story). Up to that point though, they were always quick to point out the lack of administrative fees as a competitive advantage. Says the Tribune:

You might have asked a realty agent to explain why an administrative fee of $450 was needed when you were paying tens of thousands of dollars in commissions. Good question. The answer you got might have been something along the lines of: Don’t blame me. My broker requires it. I don’t a get a penny of it.

Sure, you might refuse to pay an admin fee on top of the negotiated commission, and chances are that most agents would understand and swallow the fee on your behalf out of their commission portion, so as not to lose your listing. But the question is: Why even ask for an admin fee, when the seller is already being charged thousands of dollars in commissions, as the Tribune rightfully suggests? It’s just plain tacky, in my opinion. Sure, what are a few hundred dollars in extra fees when we’re talking about a potential home sale of say, $500,000? The sellers’ perception of being nickel-and-dimed, is what the problem is, and rightfully so.

Christina and I don’t charge our clients add-on fees. Ever. We offer a menu of services which in essence helps our seller clients make an informed hiring decision. It’s all laid out in the open. No hidden surprises, no gimmicks, no nickel-and-diming. Contact us, if you want to learn more about it.

Image courtesy: Jane M Sawyer [morgueFile]

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