BiggerPockets

Real Estate Transaction Fees

When I found myself wondering if other people are paying "transaction fees" of $295 or higher on closings around the country, I did a little research and discovered that NAR General Counsel Laurie Jane issued a statement in April of 2009, following an Alabama Federal Court's decision that transaction fees violate RESPA Section 8(b), unless the fee is for specific services actually performed. That came as quite a surprise to me, so I did a little more research.

In some recent forum postings online I notice comments by people who work as Transaction Coordinators, and some say, "oh yes, we charge a fee," and some others say, " no, we do not charge a fee." But it appears that all the Transaction Coordinators are working for agents, they are assistants hired to reduce the agents' work load I the long process of pushing paperwork through to closing.

OK , that makes sense. I have assistants, too. But in my various closings, I did not hire or expect to pay for my agent's assistant. And when I see "transaction fee" as a line item on a HUD-1 it doesn't tell me for sure that my agent hired an assistant. It doesn't tell me anything at all.

So, eventually I went to websites of various attorneys and found advice to real estate brokers. Some lawyers post articles on common legal issues on their websites, and I found more than one article directed toward real estate licensees regarding transaction fees. Basically lawyers are advising, "Don't hide anything. If you charge a transaction fee, you have to explain what actual services the fee is covering. That is the message by the Alabama Federal Court decision." Those are my words, but they summarize what I read.

When I go to a doctor's office and step up to pay my bill, I know full well that he is paying nurses and physician's assistants and also clerical help. I don't have a problem with paying my doctor his fee knowing he is paying his staff.

But when I go into a real estate closing and see that I'm paying a commission to a broker, and then in addition I see I'm paying a transaction fee that is not explained, I'm starting to have a problem with that.

I guess I'll start asking a few more questions next time I have a real estate closing scheduled. It won't be long!

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