Profile picture for rc_hal

Is it common for a buyer's broker to charge the buyer a flat fee at time of closing?

I just received a "Residential Buyers Representation Agreement" and it states in the buyer's obligations that at time of closing the buyer is required to pay the broker a flat fee of $250.  Also it includes that the broker will receive 3% of the sale of the purchase at time of closing.  I was wanting to know how common this flat fee might be?
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September 09 2010 - Dallas
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Answers (58)

It is not "common" here in AZ and this should have been disclosed to you before closing.  Did you sign a buyer broker agreement beforehand?
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October 17 2011
Profile picture for sunnyview
"You do have other options that don't include this fee."

You are 100% right and that is an important point to remember. If your agent wants a fee on top of their commission, vote with your feet. There are other excellent agents that will give you full professional service without a junk fee in tow.
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October 17 2011
I am a Realtor in Myrtle Beach, SC and generally, the commissions to both the listing agent and the buyer's agent are paid from the sale of the home and the commission varies depending on what the seller agreed to in the listing agreement. Therefore, the buyer is not required to pay a flat fee.  However, I have heard there are Realtors doing this today, not that I agree with it, but it does exist.  There are documents to sign to hire a Realtor to assist you in the purchase of a home and I would just suggest you REALLY READ through it.  If you are very comfortable with this Realtor and they are worth the $250 flat fee, then hire them.  If not, keep looking.  You do have other options that don't include this fee.

Good luck to you!
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October 17 2011
Profile picture for sunnyview
"In the Washington, DC Metropolitan Area some Brokers charge a Administrative Fee between $199-$599"

May I ask when you disclose that fee to your clients? FHA or not, if you do not disclose it upfront, I would not recommend that any client pay it.

You do not need an agent to close escrow and any company that attempts to hold you hostage from closing with a junk administrative fee should have their entire commission held in escrow pending a ruling by a court. No court in the world will compel an agents client to pay an undisclosed fee that is sprung on them at the end of the deal.
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October 17 2011
In the Washington, DC Metropolitan Area some Brokers charge a Administrative Fee between $199-$599.  If you are purchasing FHA you are not liable for the Administrative Fee, and it must be disclosed.  You should have this conversation with your Realtor, and make should you understand what the $250 fee cover.
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October 17 2011
It all depends on how your agreement was set up if you had a buyer agency agreement or not --- if it is just a flat fee that you didnt know about and showed up at closing  --- that can be frustrating. I know that sometimes we do in Wisconsin flat fees but our clients and customers are ware of them... sometimes it is a 'closing fee' but all in all flat fee's will be determined by the broker of each company usually and what they decide to charge... hope that helps!
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October 13 2011
Profile picture for sunnyview
Thumbs up Amy for calling it what it is...a "junk fee".
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October 11 2011
In the Denver area this has become a common practice, it's put on the final HUD as an "Admin Fee".  I don't know for sure in your specific case, but in my experience it's a junk fee the broker agreed to pay by joining a particular brokerage, this fee should not be passed on to you as a buyer.
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October 10 2011
From reading the posts, it appears to be geographic, not "common" or "uncommon". In Bozeman, Montana and most of the surrounding areas, you will generally never see a flat fee charged.
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October 10 2011
Profile picture for sunnyview
Paying fees that are not disclosed up front is not mandatory in any business. Unless I heard about them up front or signed a contract acknowledging them on paper before I hired with my agent, I would not pay them.Fees may vary by region, but if they are not disclosed before the final signing I would refuse them. If they were disclosed, I would negotiate them.

Maybe you feel that you earn that extra $325.00 fee, but I would not feel too kindly to having a fee sprung on me at the close. It has only happened to me once and I paid zero after telling the office broker that I would not allow my escrow to be held hostage and would close without my agent.
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October 10 2011
For those of you speaking about it being COMMON or NOT COMMON you should really think about it more of terms in specific areas.

 I have yet to see a Company in the Greater Philadelphia Region that has NOT charge some kind of a fee. It is what pays for all of the behind the scenes work that gets done to bring the transaction to closing. It always has to be disclosed as part of additional commission. 

I have yet to meet a buyer or seller who did not think that I did not earn the extra $325.00 fee (even though I do not see a penny from it)


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October 10 2011
There are some companies that do charge those fees, I was with one at the beginning of the year, its one of the reasons I left and came to Keller Williams realty, because we don't charge our clients a transaction fee. They say its for paperwork...I always felt that we do the paperwork though. The company takes that fee by the way. You should have signed something up front that informed you about this fee along with other relationships the company might have with other companies. Did you not go over the buyers agreement up front?
The commission is always negotiable, it is created generally by the seller who states that is what they are willing to pay. Every seller is different in what they choose to pay the buyers agent. You might suggest to your agent that you will not pay the fee.
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September 26 2011
In Newport Beach, CA, I have never heard of an extra fee like that. Most deals here are at 2.5% each (selling and listing agencies.)

Re: signing a Buyer Broker Agreement, I would say yes since in CA without one, every agent is automatically representing the interests of the seller.

I would suggest finding out if that is true in Dallas before assuming that your agent has a fiduciary responsibility to you. Since the proceeds of your purchase will be used to compensate representation for you - recommend that you use this to your advantage by using a buyers agent.

Best wishes for a smooth transaction!
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September 26 2011
This is a common fee from most brokers on the buy and list side of the transaction.  I actually waive this fee for all of my buyers since I don't believe they should pay a broker fee to use my service.  Our fee is $199.
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September 22 2011
Profile picture for sunnyview
It is not uncommon with brokerages trying to squeeze additional dollars out of closings, I would not pay it. Before you sign that contract, tell the broker that you want it crossed out and initialed or you will choose a brokerage without that fee.
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September 22 2011
Junk fee and it should be removed.  That is sneaky and unwarranted in my opinion. 
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September 22 2011
It's usually a back office fee.  I actually saw this come back into popularity in 2008 when brokerages were suffering and looking for new avenues of revenue.  Some brokerages charge this fee, some don't.  Sometimes agents will swallow this charge for their client.  I would speak to your agent if you're not comfortable with it.  Best of luck, Caroline
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September 06 2011

Charging a $300 fee for transactions less then $50k, or short sales is common in Atlanta. 

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September 06 2011
You can look at it this way rc-hal, since generally the listing agent is willing to pay the the selling agent a fee of 3% for bringing in the buyer, in this case you, we can set that as the base rate.
Now, this particular agent wants that base rate plus $250. Since like any contractual interaction both parties must agree on the amount of payment for the services provided you have to decide if this particular agent is worth the extra $250 or if you want to go somewhere else.
The other thing you can do is ask them if they will do this deal and waive the fee if you want to use them. I've done all sorts of deals including ones where I only got 1.5% commission to represent the buyer and others where I was paid a bonus.
Personally I don't charge my buyers anything above what the listing agent pays me and even then I've given the buyer part of my commission to get a deal done, I believe that a satisfied client that will continue to provide business or give me a good referral is worth the lost money, especially $250 which will only be a small percentage of their total commission.
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August 30 2011
I noticed your question on Zillow.  In my experience, the flat fee charge is not typically included for Buyer's Representation.  Although, it is possible your agent is hiring a transaction coordinator and that fee is typically $250-$$350 per buyer.  This coordinator does all the necessary work to coordinate title, lender requirements, appraisal, closing statements, and Amendments required during the process.  With that siad, three percent is the most common commission earned by a buyer's agent.  A flat fee charge is not as common for a buyer representation agreement.  However, a flat fee charge can and is often charged for a listing agreement where a seller contracts an agent to market and sell their home.  Typically, an agent will incur marketing costs such as showing service, lock box, marketing signs and flyers.  In addition, a professional photographer and staging coordinator maybe hired to help market the listing.  These costs are incurred regardless whether the home is actually sold or not.  Most sellers do not realize that only 1/3 of homes listed in the DFW area will sell in a 365 day period.  Obviously,  since you are questioning the $250 charge, you should discuss it with your agent to understand what services are being provided for this fee.  Good luck and best wishes in your home search!
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August 29 2011
In VA it is typical to see a Flat Commission stated in the Buyer's Agency Agreement. It can vary depending on the broker. My broker charges $195 flat fee, however as the agent it is our decision whether to charge it to the client or pay it. I generally pay the $195 for my client as is only charged when they go to closing, so I'm already making a commission.
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August 28 2011
My first question to you would be have you signed this agreement yet?  There are many different ways to look at Buyer Representation Agreements. Our team does not charge the Buyer, but rather accept's 50% of the Seller's commission offered on MLS.  We also do not charge our Buyers any additional fees. 

There are some agents and brokers who do charge fees to compensate for their time, even if the Buyer never purchases a home.  They feel that their time is valuable, just like any other employee going to work for so many hours, and thus they charge some sort of fee.  As to the flat fee charged at closing, I'm not aware of anyone in our office who charge Buyers anything.  Keep in mind, all contracts are negotiable, and if you feel that this is something you are not comfortable with, I would question your agent (broker) about it before signing.  As far as the 3% to the Buyer's Broker, we accept half of the Selling Broker's commission offered, or whatever is offered to the purchasing agent (sometimes it is less than 50% of the commission).
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August 21 2011
@Apiot,
Good for you for sticking to your guns and demand that it be removed.  It's $250 this time for you, they'll make it even higher to the next guy.

If you are using a title company, they should remove it from the settlement statement since there is no written agreement from you so don't delay your closing on that account.

Naima
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August 21 2011
Profile picture for SoCal_Engr
"Larger brokerages that were losing a lot of money at the top of the market downturn needed to reclaim funds, and hence the flat fee of $250-500, depending on the brokerage."

Older posting, but...

It sounds exactly like a used car lot. We didn't make any money, so now that we have a buyer on the lot - let's take him for all we can. Standard commission? Check. Anything else? As long as they'll let us.

Tell me all the costs I'll incur up front, before I sign anything (not that I'd sign anything with a buy-side REA), or don't bother bringing it to the table.
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August 21 2011
Profile picture for apiot
I'd like to chime in as a buyer about to close.  To buyers, be sure to read carefully, and ask questions even if these things aren't there ahead of time.  To the agent's who charge these, just be up front.

As buyers we understand this is your job and you need to make money.  If you're a great agent and working hard for us, I don't think most buyers would mind a small fee like this as it's minor in the grand scheme of things, especially if we understand it's a cost you would have to eat otherwise if your broker mandates it.

I'm in a situation right now where this was never disclosed, and not even mentioned in any documents we signed including the buyer's representation agreement.  2 days before closing I see a line item on the settlement charges for $200 Transaction Fee.  When I ask about it the only answer I've gotten was "It's not from me, it's a fee my broker charges".  A handful of emails back and forth and still no direct answer of why, if it's standard, is it not on the broker's standard agency agreement?  If it's justified and legit it should be on there.  Trying to slide it an under the radar at the end just feels like a used car salesman trick, even though I don't believe that's the intent.

Had it simply been explained up front I would've been fine with it, but now I won't close until it's removed just on the principle of the matter.  I work as a consultant and could never imagine legally, or ethically, charging a client something that wasn't in our contract.

It's great to hear so many of you just chalk it up to a cost of doing business, as anyone who works in an industry with clients has similar things to deal with.  But if you choose to not eat the cost and your broker demands it, it's really such a small amount that I would think most buyers would be happy to not have you eat that cost if you're both up front about it and giving them great service in return.
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August 21 2011
Caroline is correct.  My brokerage charges it, but I leave it up to my clients to pay it or not....
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September 21 2010
Hi rc_hal, the flat fee I'm seeing as more common.  Larger brokerages that were losing a lot of money at the top of the market downturn needed to reclaim funds, and hence the flat fee of $250-500, depending on the brokerage.  It's all negotiable though, between yourself and the agent.  It looks like the brokerage is forcing this fee, so you can ask the agent to offset the cost, or choose to pay it yourself.  Best of luck, Caroline
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September 21 2010
All fees are negotiable. FIRST, COMMUNICATE W/ YOUR AGENT IN THE BEGINNING OF YOUR TRANSACTION AND BEFORE YOU SIGN THE CONTRACT... ALWAYS... LYN
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September 17 2010
Profile picture for sunnyview
Buyers should turn their noses up to additional fees. One of my agents was in an office that wanted a "document review fee" right before the close. I refused and stated that I would walk before I would pay the undisclosed fee. The managing broker stated that it was "customary" and required. I made it clear that I would close the house with or without their agency and would be happy to sue for that amount plus damages if they attempted to strong arm me into a "fee for close" situation.

The broker magically waved the fee. My agent was stuck in the middle so I made it clear to her that I understood that she was not the one charging the fee. Brokers think that people won't notice a couple extra hundred on a house, but they do and that puts the agents that work under them in a difficult position. Be polite to your agent and make the broker/office manager field the complaint call for the office policy they set.
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September 17 2010
On occassion some brokers may charge a flat fee to cover extra costs they have for paperwork.  I personally have never charged that fee to my clients and never would.
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September 17 2010
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