Do Transaction Fees Really Matter?

Real Estate Broker/Owner with Red 1 Realty BRK.2014004189

Do Transaction Fees Really Matter?

It seems like more and more brokerages are charging a transaction fee and calling it "additional commission" to be compliant. Do they really matter to real estate agents? 

I believe they do matter to the individual agent for multiple reasons:

1. Transaction fees may deter you from getting the listing. 

It is already challenging to discuss the commission in selling the home. However, most consumers have accepted a normal percentage as agent compensation. To go above and beyond that to discuss an additional commission really brings the commission into the forefront. If the agent is competing against another agent for the listing, the other agent may also not charge a transaction fee. 

2. Transaction fees may hurt your profitability

Many consumers who Google these fees find articles indicating that they are "junk fees". When the consumer opts out of paying the additional commission, the agent then pays the fee to the brokerage out of their commission. I have also spoken to many agents who always pay the fee since they do not believe in charging the consumer a junk fee. If an agent just sells one home a month and the brokerage has a $199 transaction fee, the agent could end up paying an additional $2,400 to the brokerage firm each year.

3. Transaction fees may not provide additional benefits.

Many of the brokerages indicate it is for document storage. However, this is not a new requirement. each state already requires the brokerage to store the files for years. If the brokerage firm would provide an additional service for the fee, it would make more sense to me. However, to charge a fee for no additional benefit to the agent / consumer does seem like a junk fee. 

If you are with a broker charging a mandatory additional commision, please call me to discuss how we can help you be more profitable and win more listings. "You'll Do Better With Key!" 

Posted by

Mike Hall

Red 1 Realty

Real Estate Broker

Cell: 614.937.4162

Comments (5)

Harry F. D'Elia III
RentVest - Phoenix, AZ
Investor , Mentor, GRI, Radio, CIPS, REOs, ABR

This was one motivation for me to open my own shop. Do it the right way

May 05, 2017 05:38 AM
Kristin Johnston - REALTOR®
RE/MAX Platinum - Waukesha, WI
Giving Back With Each Home Sold!

It seems like a crock to call it anything other than extra commission...I dont do it!

May 05, 2017 05:44 AM
Nathan Gesner
American West Realty and Management - Cody, WY
Broker / Property Manager

This is the problem with larger companies: they are always looking for ways to grow the numbers.

May 05, 2017 05:59 AM
Lindsay Reagan, Realtor
Bowen Realty - Wellington, FL

I personally do not think charging a "transaction fee" is a fair practice to our clients.  To me it appears as  plain old greed on the brokers part. 

May 08, 2017 05:58 PM
Cheryl Dukes . . . . . Intown Atlanta
Solid Source Realty, Inc. - Atlanta, GA

I bought a house in Vegas a while back and the joker (oops I mean broker) tried to charge me a transaction fee. I refused to pay it because he never could explain to me what it was for in such a way that made any sense. Buyer's representation has always been free. Transaction fees are just not a good look for this industry.

Jun 03, 2017 07:50 PM