Broker Fee (formerly “admin fee”)
A fee in addition to a commission (typically %, but sometimes flat fee) paid out at closing to the Broker (not the agent) by the Buyer or Seller of Real Property pursuant to a Buyer’s Representation Agreement or Exclusive Listing Agreement (seller).
[Note: InvestProp has NEVER and WILL NEVER charge add-on fees.]
Used in a sentence:
“My agent from [fill in the blank name brand company] presented me with an Agreement to exclusively represent me. I read through the Agreement and found I need to pay a Broker Commission Fee of $420 at closing in addition to the percentage commission.”
Add on fees are common place among Real Estate Brokerages in Minnesota, most often in larger brokerages like Edina Realty, Coldwell Banker Burnett, and Remax. These fees are most often for residential properties–1-4 units. This fee shows up on the HUD closing statement, so unless you are paying attention to every line and every page of all contracts you sign, you may never know about this fee at the closing table…and by then it is too late, you owe the unnecessary fee (not to mention you just made Berkshire Hathaway / Warren Buffet (aka Edina Realty), Realogy (aka Coldwell Banker Burnett) or some other large wall street company a little richer).
Admin fees NEVER occur at InvestProp because it is simply an add on pricing game that InvestProp rejects as a non-transparent way of artificially keeping their actual commission % lower. The reason they exist is just like any other pricing war–promote the lowest %, but then have an “*” or fine print, where a company makes up the difference for the reduced fee. Technology has put lots of downward pressure on real estate brokerages and agents, thus this hidden fee is a great way for them to hide their true fees.
Buyers and Sellers always have the ability to strike or delete this language from any listing or representation contract. Agents start with the silent treatment, then will try to defend the amount as their brokerage may force them to “eat” or “net out” this amount prior to receiving their commission. Thus, the Brokerage and the Agent are both in on the fee game.
Just say “NO!!” Everything in real estate is negotiable, especially with an agent representing you buying or selling property. Strike out with your pen or electronically line out any language pertaining to any other non-commission fees. You don’t need to pay them. If your agent is pushy at all, walk away and call InvestProp. InvestProp offers no haggle, no hassle, extra fee free representation, 100% of the time.
Some other local agents and bloggers suggest, “Try negotiating for a lower rate.”
InvestProp has even better advice, “Negotiate for NO $0 add on fees.” If InvestProp is not the right brokerage for your property, feel free to use us (or this blog article) to negotiate for no fees. We are happy to be the fall-guy in the name of transparency and fairness.
Don’t feel pressured by an agent or broker by relationships or access to deals. Start all relationships on the right foot–on your mutually agreed to terms–with no add on fees. Contact InvestProp if you should have any questions.
Thanks–and look for more terms in the InvestProp Glossary!
–Brad Schaeppi, founder and CEO