Buying a Home: Why You Need a Real Estate Attorney

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Buying a Home: Why You Need a Real Estate Attorney

When I bought my first home, I basically signed whatever was placed in front of me. The idea of becoming a homeowner overshadowed any concerns that I might have. Besides, the agent seemed to know just what needed to be done. It was only later that I learned there was some confusion about the location of the property lines. Two years and several thousand dollars later, I finally got things straightened out. When I bought my second home, you can bet that I had a real estate attorney by my side. Everything was checked and double-checked before I signed anything If you are thinking about buying a home, take nothing for granted. Let me tell you more about my experience and why you need your own legal counsel. In the long run, you'll save a lot of time and trouble.

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Understanding Real Estate Agent Administrative Fees

If you are trying to sell your home, then it is wise to seek out the assistance of a real estate agent. These professionals can offer you valuable information about the home selling market, and they can take care of communicating and setting appointments with potential buyers. They can also make sure that your home is listed at an appropriate rate for the neighborhood, size, and condition of your home. If you have never worked with a real estate agent before, then you should understand that you will need to sign a contract with the agent before they will work with you. To understand a little bit about the administrative fees that you may find in the contract, keep reading.

What Are Administrative Fees?

Real estate agents will generally work out of an office, make phone calls, print paperwork, and complete quite a few other tasks that require them to spend money. Some businesses call this the cost of doing business, and this term refers to how much it costs your real estate agent to provide services to clients. The cost of doing business is typically calculated monthly, and supplies, labor, rent, energy, gasoline, and other expenses are added together to calculate the cost. While many of the costs are absorbed by real estate agents, some agents add an administrative fee into contracts. This administrative fee is meant to help cover the agent's business costs.

If you see an administrative fee in your seller's contract, then you will need to pay this amount of money during the house closing. Most of the fees range from $100 to $250. These fees are common, and some real estate agents will tell you that they are meant to help cover the rising costs of doing business. The fees are legal, as long as they are reasonable and disclosed to you during the contract signing. Also, the fee must be associated with a specific service or cost, so make sure that you ask your agent what the fee is being charged for. The agent should be able to give you a specific answer.

For example, the agent may be charging you for actual supplies like paper that are used for documents. The fee may also include advertisements and other types of marketing materials that are used to help sell your home. This means that you are not really paying for the agent to conduct their business. However, you are basically being asked to pay back the agent for materials and tasks that are completed to help sell your home. This allows the agent to then use more of the commissions for expenses like rent and energy. 

Can You Negotiate The Fees?

You can negotiate whether or not the real estate agent is able to collect administrative fees from you during the closing. After all, contracts can be negotiated and redrafted if you feel that the charges are not fair. Keep in mind that the agent has the option of adjusting their commission a small amount so they still receive the money for their costs. 

For example, real estate commissions range from 5% to 6% on average. About half of this will go to your real estate agent, while the other half will go to the buyer's agent. If the buyers of the home do not have an agent, then the entire commission will go to your real estate professional. To make sure that the agent is able to recoup their costs, they may raise the commission a bit so they still receive the extra money from the commission.

For example, if you are selling a home for $100,000 and your real estate agent asks for a 5% commission, then they will receive about $5,000 when the house is sold. If the agent also wants an extra $200 to cover expenses, then they may raise the commission to 5.4%. This will allow the agent to retain the $200 extra even if the commission is split with the buyer's agent. Unfortunately, this may mean that you may be out $400 instead of $200. In this type of situation, it would be better to agree to the administrative fee in the first place. This way, the agent will receive their fee regardless of the commission and you will not have to pay more in the long run.