Relaxing between visitors at yesterdays open house I read July/August 2009 Issue of Realtor Magazine (specifically page 15 or if you missed it )
I have read other articles on active rain and other blog sites with agents defending the "administrative fee" or similar. I have also seen Broker/Owner & Firms require there agents charge an administrative fee or transaction fee. I do not charge a marketing, admin or mystery fee and my BIC does not recommend one
A U.S District Court (North District of Alabama) ruled on a class action suit againsta brokerage that charged a flat $149.00 fee in addition to commission. The official case name is Busby v. JRHBW Realty Inc (doing business as RealtySouth)
The court ruled against the brokerage - according to Real Estate Settlement Act the fee must be a charged for "services actually performed". The fee was referred to as "unearned" since it was not for a specific service. Sounds like the Badgers "dust & rust fee" to me.
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For those who need to dust off their real estate text books,
The Real Estate Settlement Act passed in 1974 by Congress. It was created because various companies associated with the buying and selling of real estate, such as lenders, Realtors, construction companies and title insurance companies were often engaging in providing undisclosed Kickbacks to each other, inflating the costs of real estate transactions and obscuring price competition by facilitating bait-and-switch tactics. The Act prohibits kickbacks between lenders and third-party settlement service agents in the real estate settlement process (Section 8 of RESPA). Even reciprocal referrals among these types of professions could be construed in court as a violation of the law of RESPA. It requires lenders to provide a good faith estimate for all the approximate costs of a particular loan and finally a HUD-1 (for purchase real estate loans) or a HUD-1A (for refinances of real estate loans) at the closing of the real estate loan. The final HUD-1 or HUD-1A allows the borrower to know specifically the costs of the loan and to whom the fees are being allotted.
(Wikipedia.com)
The Firm in questions claimed, the money does have a purpose it helps reduce overhead and is not split with the agent. I am sorry business doesn't work that way. If this were a restaurant, would you pay a fee to reduce the owners overhead on top of the price for your bacon mushroom cheese burger? Or do you expect to pay the price on the menu. Give me a break!!! You would eat somewhere else. Educated clients would go somewhere else too. I wonder how, when or if they were explained the purpose of fee
NAR has asked that HUD further investigate this subject - The court ruled against the fee because it is believed to be a RESPA violation of Section 8(b). Although many believe the law is being interpreted incorrectly.
In today's economy everyone can use some help with personal or professional overhead. We all could just pass the buck on our bills- I would like to have someone pay my car payment please.It makes me crazy to think that agents have not learned yet that we are in an honesty business. We ask our clients to be honest with us-we should be honest with them.
As business owners, self employed professionals and Realtors, take personal responsibility for your own check book, determine your expenses as a business and charge accordingly. If your bills are still too high to find a better office, cut costs, do more YOURSELF and hire less people. Read the Shift Book.
Shady actions have gotten us into the market we are in - why continue the bad behavior?
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