I know I'm getting ripped off, but how bad is this?

I know I'm getting ripped off, but how bad is this?

Member since 2021 · 39 posts · 18 votes

So I recently met a realtor who I agreed to let act as my buyer's agent. She's probably showed me 7-8 properties and has put in a lot of time, been very responsive, etc. I assumed she would be making 2.5-3% commission which obviously is no issue. After I went under contract for a property she sent me a buyer's agreement that not only makes me pay the 0.5% difference between the contract's 2.5% and 3% (which will be about $800 extra), but also charges a $999 'administration fee.' I've seen $295, even $495. $1000 seems extreme, especially when I'm already coming out of pocket $800 extra, so I'm getting hit for $1800 extra. Can I go through with the deal without signing the buyer's agreement? Can this fee be negotiated? Her brokerage already takes 50% of her commission, so they're getting more than enough for the work they're putting in.

Complicating factor is that we've been hanging out on a personal level and went out a couple times and are still talking. The other factor is that I'm currently taking my agent's course and supposedly I can hang my license there initially (though it's not ideal for a few reasons: A) kind of far from me B) I don't want to charge my clients that fee; I'm not looking for a lot of retail business and am mainly just doing it to represent myself/my company though).

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Specialist · Indianapolis, IN · Member since 2021 · 312 posts · 282 votes
4y

For Agents who get a lot of business, it's typical to charge an admin fee. $1k seems a little extreme though! The main thing to keep in mind is that everything on the buyer's agreement is negotiable. There is no "set rate," it can go down. I would dust off my copy of "never split the difference" by chris voss and negotiate a lower fee.

Or you could just bite the bullet if it's not worth the hassle to you. 

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  • Member since 2021 · 39 posts · 18 votes
    4y

    Haha; I knew that was coming. She's actually working though, so no Jerry I will never be like you either.

    @Russell Brazil  It's around $160k which is very low for my area, needs a lot of work.

  • Member since 2021 · 109 posts · 130 votes
    4y

    @Paul Clements if things do become serious I would edit your "I would pursue elsewhere" comment. you wouldn't want her to stumble on that one day.

  • Member since 2021 · 39 posts · 18 votes
    4y

    Can't edit; I meant it in an abstract/rhetorical sense.

  • Real Estate Broker · Cleveland Dayton Cincinnati Toledo Columbus & Akron, OH · Member since 2013 · 30k+ posts · 20k+ votes
    4y
    Quote from @Paul Clements:

    So I recently met a realtor who I agreed to let act as my buyer's agent. She's probably showed me 7-8 properties and has put in a lot of time, been very responsive, etc. I assumed she would be making 2.5-3% commission which obviously is no issue. After I went under contract for a property she sent me a buyer's agreement that not only makes me pay the 0.5% difference between the contract's 2.5% and 3% (which will be about $800 extra), but also charges a $999 'administration fee.' I've seen $295, even $495. $1000 seems extreme, especially when I'm already coming out of pocket $800 extra, so I'm getting hit for $1800 extra. Can I go through with the deal without signing the buyer's agreement? Can this fee be negotiated? Her brokerage already takes 50% of her commission, so they're getting more than enough for the work they're putting in.

    Complicating factor is that we've been hanging out on a personal level and went out a couple times and are still talking. The other factor is that I'm currently taking my agent's course and supposedly I can hang my license there initially (though it's not ideal for a few reasons: A) kind of far from me B) I don't want to charge my clients that fee; I'm not looking for a lot of retail business and am mainly just doing it to represent myself/my company though).


     Don't mix business with pleasure man. That's business 101. Stop tossing your Realtor the ole' pumpy pump.

  • Russell BrazilBusiness Member
    Moderator
    Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes
    4y
    Quote from @Paul Clements:

    Haha; I knew that was coming. She's actually working though, so no Jerry I will never be like you either.

    @Russell Brazil  It's around $160k which is very low for my area, needs a lot of work.


     So not knowing what area you are in....the total commission you are being charged then with the extra fee, is still lower than my minimum commission I charge. I would actually end up in the red if my team serviced the property at the commission you are being charged.

  • Real Estate Agent & Investor · Raleigh Durham Chapel Hill, NC · Member since 2020 · 44 posts · 30 votes
    4y

    Assuming you have not already signed their agreement, the commission is absolutely negotiable. I would push back and tell the realtor you are not paying the admin fee and to take whatever the MLS has for a commission split so you are not being charged an extra $800. Here is NC, an agent must disclose additional fees up front so as soon as you saw the property that agent should have told you about additional fees. I know you have started building a personal relationship with this realtor but the fees they are charging indicate to me they are not acting in your best interest. Business is business so if they will not lower the fees go to another agent.

  • Real Estate Agent · Chicago, IL · Member since 2017 · 2k+ posts · 2k+ votes
    4y

    I have sold over 30 million and am a top agent I would NEVER make a client pay the differance between a 2.5-3%. Threaten to leave a bunch of bad reviews and trash their reputation. The admin fee is a scam and not something any non-desperate realtor would charge you. 

    P.S. Brokerage only takes 50% from brand new or very low producing agent. Anyone who is actually brokering a good ammount of properties is going to have a split in the 80-95% range. So either she is lying about the 50% or is a really low producing agent. 

  • Member since 2021 · 39 posts · 18 votes
    4y

    @Henry Lazerow  Thanks. It didn't strike me right I only offered it due to the aforementioned factors, mainly her not making enough otherwise. I haven't signed agency yet but property contract has been signed. Now that her brokerage reduced what she owes them I offered to pay the full admin fee but not the 3%. It will end up being about $500 extra, instead of $950. She is a brand-new agent just getting started. Don't know how many properties she's closed but I'm guessing in the single digits. She makes most of her income from another job.

  • Investor · Van Isle · Member since 2021 · 455 posts · 226 votes
    4y
    Quote from @Paul Clements:

    @Henry Lazerow  Thanks. It didn't strike me right I only offered it due to the aforementioned factors, mainly her not making enough otherwise. I haven't signed agency yet but property contract has been signed. Now that her brokerage reduced what she owes them I offered to pay the full admin fee but not the 3%. It will end up being about $500 extra, instead of $950. She is a brand-new agent just getting started. Don't know how many properties she's closed but I'm guessing in the single digits. She makes most of her income from another job.

    Pat yourself for helping her out. Using her in the firstplace is worth the experience alone to her. 
  • Real Estate Investor · Sacramento, CA · Member since 2010 · 298 posts · 103 votes
    4y

    That "adminstration fee" is a total scam, as someone else said. Just a creative way to gouge more money out of the unsuspecting public. If they think they need to earn more commission, let them increase the percentage but don't insult your intelligence by calling it an "admin." fee! What a crock!!

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