Buyer VIP Agreement and $ 195 Administrative fee ?

Question

Mi Indiana agent is asking me to sign a " Buyer VIP agreement" and pay a $ 195 " administrative fee " at closing. Is that how things are done there or is he and his office trying to make some easy money ? He says " I f you don't pay, I'll have to pay and I got you $ 300 toward closing cost "

Thanks in advance for your help.

Thanks in advance for your  help.

Lynn McGeein · Answer

For our last purchase in a new town (not the agent we usually work with), the agent tried to make us sign an exclusive buyer broker agreement and charge an admin fee of $150 (due at closing) before writing the offer.   We had to threaten to walk away and it delayed our offer by 2 days, but we got a clean buyer agent agreement for that home only and no admin fee.  I don't understand extra fees when they are already getting 3% commission from the deal.

Bill Gulley · Answer

Remember you can negotiate the commission toward costs too. Sounds like a gig fee to me. To find out how common it is, call the board of Realtors and ask. :)

Ed S. · Answer

The buyer VIP agreement I saw was an agreement to lock me into using the buyer's agent for a specific period of time for "house hunting," finding you the perfect home, etc.,  and eventually closing a deal. There was a kicker in there for the agent should I decide not to purchase from the BA within six months.  I would never sign that, since I just needed representation at closing and had done all of my own due diligence and had been prequalled. If you fall into the same category, I would avoid signing that.

The VIP agreement seems to be more for retail customers where the agent wants to avoid wasting time with tire kickers with no money lined up.

As for the admin fee, that's the agent's cost of doing business. They are trying to pass that cost onto you to make more money on your deal. I would not agree to pay it unless its a fixed cost they pay for every deal, and the buyer's agent commission is tiny on your deal,  but that's my personal preference. In the end, I believe that the buyer's agent should be fairly compensated for their time and effort.

Wayne Brooks · Answer

Most brokers have an add'l "admin fee" these days.  Sometimes the agent will eat it, sometimes not.  I know all "investors" think they are special, but I generally won't eat the fee on anything under $100k, unless I'm confident it'll be a repeat customer.  And by repeat customer, I don't mean somebody trying to buy a bunch of $30k properties.