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How Real Estate Brokerages Rip Buyers and Sellers Off

A couple of years ago it was determined that charging an “administrative fee” or Agency Brokerage Charge (ABC) was possibly illegal for real estate brokers to pass on to consumers.  The problem was that admin fees typically do not have a direct service attached to them, and such ambiguity is a legal no-no.  After HUD got involved in the fracas, most brokerages changed their methods and eliminated the junk fee they were charging.

That’s What They Want You To Believe

Unfortunately, eliminating the junk fees has simply meant that most brokerages have changed the way in which it is charged.  These days it is common to see brokerage fees that are now charged as a “flat fee plus commission”.  Conveniently, that flat fee is the exact same cost as the old admin fees!

Admin fees Flat fees can range from $150-$600, depending on the brokerage.  Most real estate consumers (buyers and sellers) are not aware of how or why this has happened, so they can easily be led to assume that the practice is not unusual and they don’t even blink when (if) the charge is mentioned.

What This Means To Buyers And Sellers

In short, this is essentially a way for real estate brokers to charge more for the same service they’ve been offering for years.  I understand, I’m an agent too, but do brokerages really NEED to charge higher fees right now?  The rationale for the fee is extremely complex, so perhaps I’m being overly simplistic in my approach:  I REFUSE TO CHARGE ANY FLAT FEE OR ADMIN FEE!

How to Avoid Paying Extra Fees

The answer to that is simple.  All real estate fees are negotiable, and any agent that tells you otherwise can be replaced.  If you can’t come to terms with a Realtor about how much they intend to charge, find another one.  There are plenty of agents out there.

  1. Doug Francis

    I agree that these fees are a low-class way of gouging a consumer. It reminds me of when I bought a new car and after all the wrangling to reach an agreement, the salesman mentioned the additional processing fee.

    It was an extra $400!

    Although my blood was boiling, I bought the car.

    Here is the lesson: That dealership will never get a recommendation or referral from me, and they “burned the bridge” because I hold a grudge. Real estate salesmen burn that same bridge all the time without seeing the long-term damage.

    So consumers… refuse to pay those “Flat fees”.

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