Transaction Fees Violate RESPA!

Oh where do I start with this one? I'll try my best to control my laughter and sarcasm in this posting. How about starting with a brief history of transaction fees. Transaction Fees (which we've always been morally opposed to) are a fee that many real estate brokerages charge their customers (sometimes they even try to charge OUR customers-Yeah right!) in addition to commission. These fees have become even more en vogue recently as real estate firms scratch and claw to stay afloat. I've seen this fee range from $150 - $395 and it is the policy of many companies in town, both large and small, to charge the customer this amount to cover 'certain costs'. And if the agent is unsuccessful in collecting from the customer, the broker deducts it from the agent's commission. Say What?!

The Real Estate Settlement Procedures Act (RESPA) is a federal law designed to prevent customers from paying unnecessarily high settlement costs in a real estate transaction.
So a recent ruling by an appelate court that found these fees to be in violation of RESPA leaves me with mixed emotions. Mostly, I feel vindicated by my consistent opposition to these fees, which amount to nothing more than junk fees charged to pad the brokerage's bottom line. But another part of me is dissappointed because Premier Properties and other companies with similar values have now lost a competitive edge in acquiring new customers as well as recruiting new agents.

The gist of the findings in the case Busby v. JRHBW Realty, Inc. is that if the fee cannot be clearly documented to cover a true 'settlement related cost', it constitutes a duplication of commission. I've always tried to figure out what settlement related costs a real estate brokerage could actually have. Document storage? Gas to drive to the closing? Cost of a deposit slip? Not sure but apparently the company named in the lawsuit had no basis for it and I would be surprised if any of our competitors do either.

If you are using a real estate company besides Premier for some reason, there now seems to be a legal basis to refuse paying the junk (uh, I mean transaction) fee. Better yet, just work with a company with a track record of putting its customers' interests before their own.