Administrative Brokerage Commission

11 Replies

Hi BPers - I am working with an agent to buy a rental property in Las Vegas that is listed by another agent.  However, she just sent me a revised PA that has a $375 Administrative Brokerage Commission.  In my experience, I only had to pay a brokerage commission as a seller (not a buyer).  So is this a legitimate commission?  Or, is my agent trying to squeeze a fee hundred dollars out of me?  Thanks in advance fore the responses.

Donovan

The Administrative Brokerage fee have many names but is almost always a fee required by a Brokerage from their agent on a transaction basis for the service of processing and keeping record of the paperwork involved in a transaction. (Even if a transaction does not complete, the Brokerage is still required by law to keep records for up to 5 years after last use). Since both the seller's and the buyer's agents have a brokerage behind them each side have the fee enacted upon them. 

Note that the fee is definitely negotiable and on a large transaction (500k+) you can reasonable ask the agent to take the fee out of his own commission. On smaller transactions however, the fee is considered passed on to the client by the agent just as it would a seller's agent. I hope this helped!

Originally posted by @Non Phan :

The Administrative Brokerage fee have many names but is almost always a fee required by a Brokerage from their agent on a transaction basis for the service of processing and keeping record of the paperwork involved in a transaction. (Even if a transaction does not complete, the Brokerage is still required by law to keep records for up to 5 years after last use). Since both the seller's and the buyer's agents have a brokerage behind them each side have the fee enacted upon them. 

Note that the fee is definitely negotiable and on a large transaction (500k+) you can reasonable ask the agent to take the fee out of his own commission. On smaller transactions however, the fee is considered passed on to the client by the agent just as it would a seller's agent. I hope this helped!

 Thanks Non for the insightful feedback.  The agent removed the fee this morning, after I found out that the referral program (through my local CU) that I used to connect with her,  expressly disallows this fee.  It makes me wonder if this agent can be trusted to advocate on my behalf.

It's not a big deal. Definitely not something to cause you to not trust the agent. If I had to guess probably in 70% of the time this fee is added by the agent to cover their transaction fee to their broker. It is very common for the agent to request the fee and it is ok for the buyer to not want to pay it. Either way again, its not a big deal. Sometimes it is in your interest to make sure the agent is happy so that they will want to continue to serve you. Especially if they are hard workers and actively looking for great deals for you. Would you rather them contacting you first or someone else with a great find? 

Originally posted by @James Wise :

small brokerage fees are very common. Not may brokerages without them.

 Thanks for the response.

All brokerages charge a fee to the agent but the agents usually pass the cost along. Like Non stated, it's always negotiable (even on smaller deals that are less than 500K). 

Originally posted by @Andy Chu:

All brokerages charge a fee to the agent but the agents usually pass the cost along. Like Non stated, it's always negotiable (even on smaller deals that are less than 500K). 

 Thanks for the informative response.  I am very new to the RE investment space.  So I definitely welcome your constructive feedback.

Not all brokerages charge these kinds of fees, and not all brokers pass them through to their clients, but it has become somewhat common practice.  There are varying views and rules from state to state about what's allowed or not.  I personally find it icky. I earn my money but that doesn't mean my client deserves to get nickled and dimed to save me a few hundred dollars.

Judge your broker by the work they do for you, but if they start out by having you lock in a fee it's not the best trust builder.  Now you know to ask up front how the financial side will work.

Medium team zen logo vMicki M., 33 Zen Lane | [email protected] | http://www.33zenlane.com | CO Agent # 100037721, NM Agent # 19441

Originally posted by @Micki M. :

Not all brokerages charge these kinds of fees, and not all brokers pass them through to their clients, but it has become somewhat common practice.  There are varying views and rules from state to state about what's allowed or not.  I personally find it icky. I earn my money but that doesn't mean my client deserves to get nickled and dimed to save me a few hundred dollars.

Judge your broker by the work they do for you, but if they start out by having you lock in a fee it's not the best trust builder.  Now you know to ask up front how the financial side will work.

 Thanks for offering a different perspective.

Very common. End of the day it comes down to if you think it's worth fighting with your agent over it. Since it's being charged to them by their brokerage, either you pay it, or they pay it out of pocket. If your agent does a phenomenal job and you have a great relationship with them, is it really worth going to battle over a few bucks? Try to look at it like just another cost of doing business.

It is common.  I don't charge it.  I usually point it out to potential clients too.  So if someone else tries to charge them, they see more value in my deal.

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