Free of extra fees, that is.
Remember the days when you bought a car only to find out at the end of the transaction that the dealer charged a “prep fee” or “dealer fee”? Well in residential real estate that same type of practice continues. Almost all brokerages charge some type of extra fee, commonly referred to as a “transaction fee” or “processing fee”. The amount varies from company to company but the average seems to be around $250.00. The fee is charged to buyers and sellers alike and most people don’t even realize that they are consenting to the charge until they are about to go to closing .
At Lyons Realty Group, we don’t believe that a buyer or seller should be charged anything above the earned commission. You won’t find any hidden fees in our disclosures or listing agreements – period!
The brokerages that do charge these fees often try to justify them by saying something like, “It covers the expense of the transaction”, or “We are providing extra service for the client such as keeping electronic files or storage of the file”. But wait, isn’t that just part of doing business? Did the client really gain a measured benefit? Most times I doubt it and it serves only to increase the bottom line for the company.
Not too long ago the Federal Courts ruled that such fees were violations of The Real Estate Settlement Procedures Act (RESPA) and therefore illegal. The Supreme Court, in 2012, sort of said it was not a violation of RESPA so long as the fees were not split.
Now on occasion there is justification for charging above and beyond the commission. For instance, when I list a home for sale which just came out of probate and the place is a mess, I charge my client a reasonable fee to arrange for cleaning or junk removal. I sometimes spend 3-4 days just prepping the home before I can take photos and show it. I think that justifies something more than just the commission.
The bottom line is that there is no law or rule that requires these extra fees. Each company can charge them, negotiate them, or simply don’t charge them.
Please contact us for free no-obligation consultation. Oh, and no Dealer Prep charge.