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Don't get caught up in paying this Junk Fee!!

When buying or selling real estate, opportunities exist in a number of areas in the transaction for lenders, brokers, title agents, inspectors, and various other entities to charge fees that ultimately increase the cost of your real estate transaction. While many of these fees are necessary (and customary), some are just downright junk fees. Recently a new junk fee has quietly worked it's way into our industry, and I'm drawing attention to it for 3 reasons.

1. It is a junk fee that, to my knowledge is only charged by one Real Estate company doing business in the Grand Island market, and they are the largest.

2. It has been added as standard contract language in my statewide forms service that most Realtors use to draft listing agreements, and purchase agreements, making it appear normal.

3. Tens of thousands of dollars are being made off of this annually.

The quest for ever increasing profits drives companies to always consider new ways to add revenue to the bottom line. Remember when you could go out and buy a new car, negotiate a price, and get out the door without paying a "$199 Document preparation fee?"

Those days are almost long gone, and now it's arrived in the Real Estate business. They get away with it because nobody says anything - until now!

For years now people doing Real Estate business in the Lincoln market have been subjected to a $250 transaction fee on every listing and sale handled by many firms Agents. The administrative commission (transaction fee, paperwork fee, whatever you call it) being charged in Grand Island is currently $100 and as soon as the public embraces it, how long do you think before it will be before it gets to $250?

Making the abnormal seem normal.

Having it added as standard language in listing and purchase agreements completely amazes me, and troubles me at the same time. When something is presented to you in contract form, looking official as it does, it may not come off to you as an added junk fee that is completely arbitrary and that is not charged as a routine customary and necessary expense by the industry. Instead, it is presented as standard and customary language in a form that is used by most every GI Realtor I know. The amazing part is no one, to my knowledge, is ever given the option to decline the fee. It is written or typed in the agreement and presented to clients as a "matter of fact".

It's a 100% pure profit item that goes directly to the companies bottom line - not to the Agents. Best of all, it's an easy fee to charge. It would be a cakewalk to charge it myself, but I won't - how can you take 7% from a seller - and then squeeze them for another 100 bucks?!

I'm certainly not blaming the Agents for this. They didn't invent this fee, nor did they ask for it. The sad part is they don't think they have a choice - when in fact they do. Company policy is no longer company policy when collectively Agents band together to say "NO - not in Grand Island!". I think they all understand that I won't let it go away, and I'm sure other Agents and Firms will delight in notifying potential clients of the higher cost of doing business with firms that charge an administrative commission. If I were the first to it, the Realtors would likely label me a hypocrite - giving a bargain rate to somebody and then slipping a junk fee in the back door.

The bottom line is this - since you've read this far, I can confidently assume you will never pay this $100 fee - and as such I have accomplished my goal of reaching someone today and educating them. As a consumer you have the right to say NO. You have the right to work with companies that do not clip you for this fee. You have the right to negotiate the best deal for yourself, and I encourage you to do so!

Copyright 2006 Ty Romsa Real Estate Center All Rights