Transaction Fees - What They Are And Why A Seller Should NOT Pay Them
What are transaction fees?
Over the past few years most, of the larger real estate companies, as well as many smaller ones, began charging "transaction fees" to their clients as a means to generate additional revenue over and above commission income. This true in St Louis as well with many companies charging fees around $300 and even higher. At MORE we do NOT charge transaction fees to our clients or any other fee other than the normal commission we charge a seller.
Why A Seller Should Not Pay Transaction Fees
At MORE, we feel that the sales commission we charge sellers is fair compensation for us marketing and selling their home. We do not think it is fair to charge our clients an additional fee on top of this as all of the services we are performing for the seller are being paid for in the commission. For the same reasons we don't charge sellers a transaction fee (or admin fee) we feel sellers should not pay them. In addition, we feel this is unfair to a seller as when interviewing agents to list their homes, most sellers, when inquiring about the cost of selling their home, only know to ask what commission rate the agent's company charges. Granted, some agents with firms that charge transaction fees are very upfront about it and will tell the seller, but often times the seller doesn't ask and may not become aware of it until they sign the listing papers or, worse yet, until closing.
The Legality of Transaction Fees Has Been Questioned
The U.S. Department of Housing and Urban Development (HUD), which is charged with overseeing RESPA (Real Estate Settlement Procedures Act) has had a long standing position that transaction fees violate RESPA which prohibits "unearned fees". Well, in 2012, the real estate industry's concern over this was put to bed when the U.S. Supreme Court ruled that such unearned fees are not a violation of RESPA as long as they are not shared between two or more persons. So, as long as the real estate company doesn't share the fee, they are OK. Did you catch the part about an unearned fee" though? Hmm... Again, MORE does not and will not charge a transaction fee, period.