Greater Cleveland and Lorain County Home Buyers and Sellers...BEWARE!! Watch out for HIDDEN JUNK FEES in the Small Print!

By
Real Estate Agent with RE/MAX® Pros
https://activerain.com/droplet/6vY

   FINALLY...Tom Meyer, a well-respected Investigative Reporter for the local NBC news channel here in the greater Cleveland area, finally brought to light an issue that's been bothering me for years...the so-called "Administrative Fee" hidden in the small print of the real estate contract that many of the large local real estate brokerage firms have been sliding under the radar for years, charging their customers an extra $250 to $500 per transaction side...with most clients not even realizing they were even being charged this fee.  (see Tom Meyer's video report at http://www.wkyc.com/news/investigative/investigative_article.aspx?storyid=130611&catid=230 ).

Businessman With Magnifying Glass

    As far as I can recall, this fee has always been ambiguous, and no one seems to have been able to explain what this fee is really for, what service it covers.  Apparently, Tom Meyer, in all his investigative efforts wasn't able to uncover any real explanation for the fee, either, other than it's an unlawful HIDDEN Fee, and is supposedly to cover the real estate brokerages' expense to store the contract files, per IRS requirements.  Well, the brokerages have been, for as long as I can remember, required to maintain files for tax purposes, for at least 3 years or more.  But all of a sudden these brokerage firms have gotten the brainstorm that their clients should compensate them for this IRS requirement, as if the clients are getting some benefit for the brokerage company storing the files.  And the fact that the fees are buried in the fine print of the listing and purchase contracts, rather than being readily disclosed to the client, is where my real bone of contention lies.

    For years, I have had a serious problem working for any broker who charges this bogus hidden, junk fee.  In fact, one broker I worked for back in 2003 started charging the fee, and I told the broker I didn't feel right about it.  He said there was nothing that could be done about it, that "corporate" required it.  And when I told my clients about the new fee, naturally they wanted to cross it off in the contract, and then my broker informed me that I would be responsible to pay it, if the client refused to pay.  That it would be deducted out of my commission check!  Well, needless to say, I beat feet to move my license to a broker who did not charge this bogus fee, and where I would not have to try to explain this ridiculous fee to my clients.  If I would not personally feel I would want to pay that fee, if I were the buyer or seller of a home, then how could I feel right expecting or trying to justify the fee to my clients?

Moneybag

    Tom Meyer furthermore stated that according to IT experts, it costs pennies to store these files on a computer disc, which is a far cry from the $250 to $500 per transaction side that these brokers have been charging their clients to cover the file storage costs.  According to Tom Meyer, in his story, four companies were shown to be charging these bogus fees.  He mentioned them by name, and even drove the point home further showing the companies' yard signs, painting an indellible visual reminder, in case of audio failure, I guess.  His report found that the local Coldwell Banker, the local Century 21, as well as two large local firms, Russell Realtors and Howard Hanna, have all been charging these bogus fees.  He went on to say that a large anti-trust law suit is pending regarding this, and when he asked those brokerages to respond, only one agreed to make a statement.  That broker had their attorney state that they were in the process of getting the anti-trust lawsuit dismissed.  (It sounded like a weak excuse, with nothing to back up this supposed dismissal.)  The attorney made no other comment.

     Well, if nothing else, at least, the simple fact that this story was aired on tv, and hopefully with enough people seeing it last evening (it couldn't have been on at a better time...immediately following the highly watched Olympics Opening Ceremony!)...well, if nothing else, at least hopefully the general public now has heard about the bogus fee, and if that knowledge causes them to direct their business to real estate firms who do not charge these bogus fees, then that's a good thing!  And apparently, I'm not the only realtor who is opposed to the fees...it was realtors who brought the fees to Tom Meyer's attention, and which initiated his investigative report!  I believe that these brokerages have some "'splainin'" to do to their clients, as well as to the courts, if and when this case does come to trial.   

   This report, if nothing else, will make these brokers at least accountable for what they are charging the clients that they are supposed to have a fiduciary relationship with.  And in the meantime, hopefully enough of the public has heard of this report, and will choose to take their business to firms that do not charge these junk fees.  There's nothing that will make the brokers more honorable than when they are hit in their wallets!  So, hopefully, if for no other reason than that, these brokers will be forced to rethink charging the bogus fees.  And that would be a good thing, for sure! 

We at Keller Williams Greater Cleveland West do not charge this so-called administrative fee, nor any hidden fees.  We truly believe in honoring an above-board attitude in how we do business.  Please call me any time, for straight-forward real estate advice, when thinking of buying or selling a home.  I'd love the opportunity to help!  JoAnn Abercrombie 440-781-1924.  Or check out my real estate tips and MLS Property Search at www.joannsellshouses.com.   JoAnn has been a top-producing real estate broker for over 26 years, in the Avon, Westlake, N Ridgeville Ohio area, serving all of Lorain County and the western Cleveland suburbs.  JoAnn would be happy to give you a free market evaluation of what your home should sell for in today's real estate market.  Give her a call at 440-781-1924 or email her at joannlovesrealestate@yahoo.com .

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Rainmaker
359,256
Aaron Vaughn, REALTOR© 512-845-4204
eXp Realty - Canyon Lake, TX
My knowledge is your power | eXp Realty

You cannot call the admin fees unlawful, becasue they are legal.

You can call them immoral and unethical, becasue they are.

I used to work for the big-dog KW office in Austin (SWMC), and the agents there routinely charged admin fees.

Feb 13, 2010 08:31 AM #1
Rainer
112,346
JoAnn Abercrombie
RE/MAX® Pros - Avon, OH
Making a Difference in Your Move!

Thank you for the comments, Aaron.  I can't account for what a KW office did in Texas, but I I can say that my KW office here has never charged those fees.  I was merely stating what the investigative reporter had commented.  He said that case was being brought to court, as the fees are not justified by any service being performed in exchange for said fees, which is in direct violation of The Real Estate Settlement and Procedures Act.  And we have a fiduciary responsibility to make sure the fee is for a service that is above and beyond what's included in the commission.  Document storage is not a legitimate service that a client should be charged for.  That's why I agree with the reporter that the fees are in violation of the law, and certainly they are immoral and unethical, as you said.  Hopefully, the brokers who charge them will be accountable to what fees they charge the clients they are supposed to represent. 

Feb 13, 2010 08:58 AM #2
Rainer
109,207
Ron T. Weems Jr.
Weems Property Group | KW North Sound - Bothell, WA
Managing the details one home at a time.

Our KW office has no such fee either. I like when reporters get involved in some issues at times. They are able to bring it to more people attention because it is on the news.

Feb 13, 2010 09:04 AM #3
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Rainer
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JoAnn Abercrombie

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