Nickles & Dimes: The Hidden Cost of Buying

If you have ever bought or considered buying real estate property with an agent, the first thing you most likely heard was "the best thing about using an agent to buy real estate is that it is completely free to you - the seller pays all commissions."

While this may not be the case in your state, it is the standard in many. However, now just when you thought you might consider using an agent, a trend is beginning to take-on with real estate agents - a fee charged at settlement to the buyer.

In Maryland, the Baltimore Sun recently published an article in the real estate section (February 4, 2001) indicating that two of the largest real estate firms in the area now impose a fee on buyers. These firms refer to this fee as an "Administrative Fee" and depending on the real estate firm, each charge buyers differently - $149 and $195.

The president of one firm calls these fees unavoidable, arguing that as more government regulations have been established (keep in mind that these have been established to protect you, the buyer or seller), realtors now have more paperwork to file as a result, thus the need for the fee. Now, if you have sold a home in Maryland in the past two years, then you may be thinking - big deal they have been charging sellers an "Administrative Fee" for a while.

These realtors are already receiving commissions between 5 and 7 percent of the sale price. The "Administrative Fee" is in addition too. In the Washington, D.C. metropolitan area the median sales price was $177,500 for 2000 - 7% commission would be $12,425.

Real Trends, an industry newsletter that ranks brokerages, reported that one of these firms conducted over 24,000 transactions in one year where it represented the buyer or the seller (and in many cases probably both). Splitting the commission ($12,425) and multiplying it by the transactions for the year (24,000), yields a conservative estimate of $150 million in revenues from commissions. Adding the buyers' "Administrative Fee" yields an additional $4.5 million, well then there is also the sellers' "Administrative Fee", I think you get the point - don't be fooled, these realtors are increasing their revenue stream and bottom line.

Don't face the challenges that additional fees can present.  Speak with one of our specialists about the standard fees involves in a purchase in Jacksonville or Ponte Vedra Beach and we will help make sure you get your purchase with the least amount of cost possible.