Let me state right up front that we DO NOT charge a transaction fee so we don't really know or understand why some brokers do charge one.  What I want to share in this post is why we DO NOT charge one and why we WILL NOT charge one.

First of all, what is a transaction fee?  In a nutshell, it is an additional fee, on top of the commission, that some brokers charge to buyers and/or sellers of real estate. 

The most common explanation for charging the fees is that it is needed to cover the costs the broker incurs in complying with state and federal laws regarding maintainence of paperwork/files for a number of years.  Obviously those costs could add up, especially for brokers with lots of transactions. 

The first time I heard about these fees (several years ago) my initial reaction was, "You've got to be kidding me!"  After several years of thinking about it, my reaction now is, "You've still got to be kidding me!" 

"Fees" are strange little things, in my opinion.  "Fees" are what politicians charge us when they don't want us to think that our taxes are being raised.  And, likewise, "fees" are what brokers charge when they don't want you to think that you are paying a higher commission.

And, from what I understand, there is a LEGAL difference between taxes and fees and there is a LEGAL difference between commissions and fees... the question I've had all along is whether or not there is any PRACTICAL difference between the two and if not, how long might it be until someone brings a law suit challenging that supposed difference.

Well, lo and behold, someone has and they won in a class action law suit brought in a Federal Court!  It happened in Alabama and you can read about it HERE.  The question I have now is, "when and how is this going to affect brokers in other states?"

I sure am glad that we never charged this (junk, in my opinion) fee.  In fact, I've said all along that if my broker decided to charge it I would find a new place to hang my license.  Fortunately I've never had to face that decision because both brokers that I have worked for shared my opinion and concerns.

For any buyer or seller that understands this fee up front and doesn't mind paying it... more power to them.  Me?  I like to know what I am paying for and I like to know that the money I'm spending is used for the purpose stated.  Something about fees (especially fees that look like junk) just gets my goat.  If I were the buyer or seller I would just say "NO THANKS, I'll find another broker to assist me who doesn't charge extra fees."