Ismar Maslić

Montalvo Realty
14585 Big Basin Way, Saratoga, CA 95070
(408) 877-6000


Ask a real estate pro: Is agent's transaction fee legitimate?


Q: I want to know if the “transaction fee” being charged by my real estate agent is a legitimate cost. I have spoken with three different agents, and they all insist on charging me this fee in addition to a 6 percent commission. Do I have to pay it? – Richard

A: Real estate agents can charge any reasonable fee for their services, whether it is 4 percent, 6 percent, 9 percent or a flat fee. While 6 percent is normal for most residential transactions, there is nothing stopping an agent from charging a different amount if you agree to pay it.

The same logic also applies to the transaction fee, which is also called a “compliance,” “administrative” or “processing” fee. Most of the time, the extra charge (about $500 or so) is just more commission, rather than a fee for additional work.

If you agree to pay it, fine. But you can object and have the agent remove the fee from the closing documents if it wasn’t previously agreed to.

Most experts insist that the additional fee can be charged as long as it is fully disclosed in a way that is not misleading and is reasonably priced for the actual services performed.

While the law does not protect you from negotiating a bad deal for yourself, it does protect you from being misled into making that bad deal. The real key is that when you hire a Realtor, or any other service provider, the work being performed and what you pay for it is negotiable.

The information and materials on this blog are provided for general informational purposes only and are not intended to be legal advice. No attorney-client relationship is formed, nor should any such relationship be implied. Nothing on this blog is intended to substitute for the advice of an attorney, especially an attorney licensed in your jurisdiction.

Board-certified real estate attorney Gary M. Singer