Notes From Readers: Application of Admin Fee Decision Limited

Readers of REALTOR® Magazine share insights and comments from recent events and articles.

September 1, 2009

In the article "Brokerage Admin Fee Shot Down" (July/August 2009, page 15), which concerns a court decision that prohibits a brokerage from charging an administrative fee to offset overhead costs, it wasn’t clearly stated that the negative ruling applies only to jurisdictions within the U.S. District Court for the Northern District of Alabama. Given the amount of uncertainty surrounding administrative fees, it’s important to note the limited applicability of this decision. In many states, brokers may legally charge percentage commissions, flat-fee commissions, or any combination of the two. Also, although the article notes NAR’s contention that the ruling misconstrues RESPA and says that NAR is seeking clarification from the U.S. Department of Housing and Urban Development, it doesn’t mention that the association has offered to file a friend-of-the-court brief on behalf of the brokerage once an appeal is filed.—Steve Brown, CRB, GRI, executive vice president, Crye-Leike Inc., REALTORS®, and immediate past chair, NAR Real Estate Services Advisory Board

Editor’s Note: Thanks for writing, Steve. As you note, courts in other jurisdictions have weighed in differently on the fees. The U.S. Courts of Appeals for the Fourth, Seventh, and Eighth circuits found no violation unless there’s a sharing of the fees between two or more settlement-service providers. Nonetheless, NAR General Counsel Laurie Janik recommends that to be on the safe side, brokers, in their disclosure, explicitly tie fees to services performed. Also, don’t create the impression that any particular fee is for a separate service if that’s not the case. For more on the topic, read Janik’s memo "Price Increase or Unearned Fee?" at REALTOR.org.

Sound Advice From an Experienced Broker

I just read the online Q&A with REALTOR® Emeritus Chiquita Abbott ("Words of Wisdom: Real Estate Is Not a Hobby"), and I have to tell you that this is one of the best articles you’ve done. I appreciated the realistic insights from a broker who’s still active at 84 years old.—Cathy Lane, Cathy Lane & Associates, Fair Oaks, Calif.

AMCs Are the Cuplrits

I’m writing in response to the letter (July/August 2009, "The Real Appraisal Problem," page 8) from a reader who complained about out-of-area appraisers ruining deals. I’d like to share my thoughts on why this is happening. It’s because appraisal management companies give their orders based on who’ll do the work cheapest and fastest, not taking into account experience or quality of work. The real question is: What exactly are the AMCs doing to earn half or more of the appraisal fees?—Licensed appraiser (name withheld upon request), San Antonio, Texas

Editor’s Note: For more points of view on AMCs, see our article "The Trouble With the HVCC," page 24.

Kelly Quigley

Kelly Quigley is the former managing editor of REALTOR® Magazine.

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