Admin Fees, MSNBC & 515+ Comments.

In case you missed it, MSNBC’s front page linked to their RedTape blog which ran a little piece on bogus Admin fees. My 2007 admin fee post fueled part of the article. So far there are 515 comments over there, and 5,000 unique visitors over here.

I hate admin fees. Never charged them, never will. (kinda like Sprite)

Just a couple of corrections to my quotes in their post (which they are working on).

1) I initially estimated that admin fees were charged on 40% of deals. I guess I was being conservative. That is actually more like 70% based on 20 recent HUD1s that I pulled (not charged by us, but by the other broker). Also to clarify their post, I don’t know if these fees were agreed to in the initial consultation, or were just sprung up at closing.

(even if they were brought up initially, they are still bogus if the client doesn’t know better, ie they don’t subscribe via email in the upper right corner of my blog. )

2) They quoted me as saying that “many agents” are allowed to keep the admin fees charged by brokers. I actually only know of 1 (maybe 2) agents/brokers that do that. If that was prevailant, it would be EVEN WORSE and I’d go and become a lawyer for the class action on that one! (oh yeah, I got into a law school. I start in the fall.)

But the point wasn’t missed in their post. Agents aren’t completely innocent in their “Sorry that is company policy to charge this.” excuse.

Agents that are with firms that charge bogus admin fees are part of the blame.

Why? Isn’t the broker solely to blame for charging this?

No. They are charging that fee, in part, because they can’t make enough from the agents. Why? Because the agents are demanding better splits. (and they have big offices)

Exaggerated Example/Scenario:

Agent A is with 123 Realty that offers a 60/40% split (firm get 40%). And this 123 Realty charges no admin fees to clients.

Agent A gets courted to move over to 789 Realty. They offer 70/30% split plus a $300 per deal admin fee (that either the agent or the client has to pay).

So when Agent A moves over to 789 Realty and then says to their client, “Opps sorry, this firm charges $300 more per deal, nothing I can do about it. What? You want me to eat it? Heck no, that isn’t ‘fair’.”

Meanwhile on a $10,000 commission, the new company “gives” the agent $1,000 more.While charging $300 to their client.

Another thing that sucks about admin fees is I will see the SAME company charge them one day, and not charge them the next day with a different agent (at least not on the HUD1). So either the agent ate it offline (not HUD1) or they stood up to their broker and said,

“Not only am I not paying this, but I’m not passing it on to my client. Mr(s). Broker, if you don’t do this, I’ll switch over to (if they will take me, no newbies sorry).”

But sometimes brokerages ARE to blame.

Some brokers will start agents off with a 45/55% split (55% for the firm). But of course the $5,500 out of that $10,000 doesn’t cover “admin.” What? Is that $5,500 profit and the $300 is to cover xerox copies (admin)?

Anyhow, thanks MSNBC for blowing the cover off this garbage fee. I hope to help you expose more Realtor tricks.

Tips for Realtors: Tell your broker no. But if you are on a 100% split paying $200 per month, you better believe they are going to charge “admin fees.” Or push you hard toward their Affiliated Business.

Tips for Buyers: Hell no. Buyer Agents advertise their services as “free.” Not “Free*” with a $300 fee.

(I never say I’m “free.” Yes technically the seller pays, but the buyer is the one writing a check at closing, and a part is coming to me. I realize that. Thank you. I hope I helped, and you found it worth it.)

Tips for Sellers: Well this is tougher. At least they aren’t saying their services are “free.” They are saying their fees are XYZ% plus $300. You always have the right to go negotiate the commission split AND/OR the admin fee. But remember, that doesn’t mean the listing agent has to say “yes.” With your right to ask for less, is the agent’s right to say NO. (nothing wrong with discounting or rebating. I write about it here… “I used to do it… but then I got good decent.”)

Tips for Brokers: Just because everyone else is doing it, that doesn’t make it right. Also go cut some overhead. The world is virtual. Get out of the 0.5 real estate world and join the Web 2.0 world.


– Written by Frank Borges LL0SA- Broker
(please report typos)

  • 12
  • July
  • 2008

11 Responses to “Admin Fees, MSNBC & 515+ Comments.”

  1. Las Vegas Real Estate - Paul Francis, ABR,CRS (Coldwell Banker Premier) says:

    As always — well said Frank. The first time I came across this mandatory charge I thought that meant that I would have an escrow coordinator that would take care of all the paperwork.

    Nope — same ole, same ole… I just have a nicer office that the clients hardly get to see.

  2. JCKC Realty says:

    Well it is amazing that a lot of people think they can work out of a hole in the wall or their car to represet their professional image. Yes, the world of real estate is web based in a lot of ways, but we are still in the business of working with people and customer service/sales. I’d rather not be looked at like a tacky used car salesman and have a nice environment to bring my clients to for meetings and to go over paperwork or listings. Depending on what you get, there is nothing wrong with office fees, especially when everyone wants the highest split possible these days or they will just work for whoever. We wonder why real estate agents have a bad name?

  3. FRANK LL0SA Va Broker- says:

    JCKC, Please help me understand what you are saying. Are you a broker or an agent? Sure we all got overhead of some sort, and I made fun of brick and mortar companies.

    But tell me why the client, after paying $10,000 and up to $5,000 goes to the brokerage, why they need to charge a $300 admin fee?

  4. Joe Virnig, "No Ordinary Joe" (RE/MAX Gold Coast REALTORS, Ventura County, California) says:

    Admin fees suck. I never charged them and now I end up paying them since the brokerage I work for instituted them.

  5. JCKC Realty says:

    I don’t understand how you are charging the clients for the $300 fees? We don’t build the fees into our clients, it’s paid by the agents. Most agents aren’t even worth what an office has to pay to carry them. Here, most offices charge an admin fee monthly, not per deal and it’s paid by the agents. Ranges from $100-$250/month not per deal in our coverage area.

    I think if an agent doesn’t like having to pay a fee or split their commission, they should go get their own broker’s license and work for themselves and see just how easy it is. Most won’t take the chance so why get upset when you pay someone else for taking it for you?

  6. FRANK LL0SA Va Broker- says:

    Hey JCKC

    I guess I misunderstood you sorry. I guess they call it different names here in VA. The admin fees are fees charged to the clients by the brokerage, and the agents get charged a desk fee, or monthly flat fee, or commission split.

    I don’t charge admin fees to clients.


  7. Anonymous says:

    I work for a brokerage that charges an admin fee. Over the past few transactions I’ve been instructing the settlement agent to take the fee off the HUD, and I wait for the accountants in the sky to charge it against my account.

    I, like many of you, have heard of different reasons for my brokerage charging the admin fee. You think I should know, but I don’t. Since I can’t get a straight answer from my own brokerage as to the reasons for the fee I tell my clients that they won’t be charged for it.

  8. ARDELL DellaLoggia says:

    “Go cut some overhead”…that is definitely the future of real estate.

    I heard you were going to be at Inman…hope to meet you there.

  9. Kim Harris-Broker/Owner/Sound Realty says:

    Just like you Frank, never charged any extra fees and never will. All my agents work from home and very seldom even step into an office.

    Just junk fees with another name…..

  10. Anonymous says:

    I purchased a home with L&F back in March. They charged me that crazy admin fee. I noticed it before hand on the HUD-1. Since I signed to it, I paid for it.

    I don't agree with it and voiced my concern with my agent, but of course she said it was for all the paperwork that's was involved.

  11. Tina Merritt says:

    I have hated that fee since it was implemented years ago. The answer I have never been able to get from the company is, “If I can negotiate a higher commission than the other agents, why do I still get penalized for not collecting an admin. fee?” Congrats on your wedding Frank!

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