Friday, January 20, 2017

Bandits Are Back in Town

Beware the junk fee. It's one thing to be bested by the other party in a transaction. It happens. It is another thing altogether to be taken advantage of by one's own team. Most purchasers who are getting a mortgage scrutinize their lender's disclosures trying to figure out if there are any junk fees and, if so, where they are buried. It can be difficult with today's complicated loan disclosures. Sellers are rarely concerned with the borrower's loan fees but the lender may not be the only shark in the tank.

In most Florida residential transactions, the seller is paying all real estate commissions which her listing broker shares with the buyer's broker, usually but not always, equally. There is a well-known local broker who frequently shaves off a larger portion for himself and tosses a leftover bone to the buyer's broker. Sellers agree in their listing agreement to the amount of commission and how it is to be shared with the buyer's broker. I'd love to hear Mr. Well-known's pitch for the unequal sharing. What Ms. Seller probably doesn't expect nor know to look for is an additional junk fee from her listing broker. I've written about these rip-off fees several times as far back as 2007 and thought they had quietly gone away by now but I encountered one last week.

I'm not sure at what point that $345 fee circled in red was disclosed to the seller or if it was just a coughed over small print item on the last page of the listing agreement. However it was disclosed/sold it was not justified and was a blatant rip-off of the client. In this instance the seller was already paying $12,762.50 which her broker shared equally with the buyer's broker. To gouge her for another undeserved $345 was, in my opinion, disclosed or not, shameful. My partners and I decided to form our company over a decade ago in large part because of our refusal to charge these types of fees to our clients when we were working for another local brokerage. At that time they cleverly called their junk fee a "Regulatory Compliance Fee". To quote Damon Wayans, "Homey don't play that." Adios.

Buyers and sellers of real estate, do not pay these fees. If you see one on the settlement statement, stop the proceedings and demand that it be removed. Trust me, your agent will be more than willing to pay that $345 out of his multi-thousand dollar commission check rather than let the deal die.

Some of the past posts about these fees for those who may have missed them.:
Unarmed Robbery Broker Style 
Revisiting Compliance Fees
Robberies Update

"Never make fun of people for mispronouncing a word. It means they learned it by reading." __Morgan Housel