MIAMI Association of REALTORS



Question & Answers on Charging Fees Outside Commission

Q: What is the Busby case?

A: Vicki V. Busby ("Buyer") purchased a home using a federally insured loan.  JRHBW Realty, Inc. d/b/a RealtySouth ("Brokerage") represented the Buyer in the transaction.  The Brokerage charged the Buyer a $149 "Administrative Brokerage Commission" ("Fee"), in addition to receiving a commission paid by the Seller.  The Brokerage charges all of its clients the Fee, regardless of whether the client is a purchaser or seller.

The Buyer filed a lawsuit against the Brokerage alleging that the Fee violated the Real Estate Settlement Procedures Act ("RESPA") because the Brokerage did not provide any services to support the Fee.  The court stated that an 8(b) lawsuit could occur when no real work is done in exchange for the fee, or the fee exceeds the reasonable value of the services actually provided.

The United States District Court for the Northern District of Alabama ruled that the Brokerage had not identified settlement services to support the Fee and therefore the court ruled in favor of the Buyer and the class she represented.



Q: What was the "array of services" defense that RealtySouth used to justify the ABC fee?

A:  Mr. C. Tyler Dodge, Senior Vice President and Chief Operating Officer for RealtySouth, testified that the ABC Fee "is simply an increase in the price or fee that RealtySouth charges for all its brokerage services rendered to most buyers and sellers."  The ABC Fee is "not intended to cover a specific service (for example, a flat fee for record storage or for attendance at the closing), it covers a whole variety of services provided to both buyers and sellers and helps defray significant increases in overhead that RealtySouth had incurred for many years and continues to incur."

RealtySouth's costs in complying with various regulatory requirements, providing consumers with both standard and increased services, including, among other things, providing facilities, offices, equipment, a far more functional and enhanced web-site and other technological departments, greater availability of information along with a better ability to search for and access such information, and contracts and other business forms for its agents and customers, just to name a few.  In addition, in the Busby transaction, RealtySouth and our agent actually helped Plaintiff Busby locate and buy the house that she desired to purchase.



Q: What does this mean for Brokers?

A: In light of a recent federal district court ruling against a brokerage's administrative fee as a RESPA violation, brokers should take precautions in how they characterize their compensation, NAR's General Counsel Laurie Janik says in a memo on the court's decision. (Insert Link to Memo)  Section 8(b) of the Real Estate Settlement Procedures Act (RESPA) prohibits charging a fee that's not tied specifically to a service. As interpreted by the court decision, an administrative fee to help offset operating and other costs is unearned because it connects to no specific service.  Janik says the ruling is likely to be appealed once other proceedings in the case are completed.  In the meantime, placing separate labels on what is all compensation to the brokerage firm exposes the firm to the same claims asserted against the defendant here.  Brokers should clearly indicate that any flat fee in addition to a percentage-based commission they charge represents payment for services provided by the brokerage.  These combined amounts should be disclosed in the 700 section of the HUD-1 as the broker's compensation.  



Q: Does the flat fee commission need to be split between the broker and the agent?

A: Yes.  All monies earned by a sales associate as a result of any real estate service must be paid to the sales associate by his or her employer and not directly by the buyer or seller.  Sales associates are compensated by splitting commissions paid to their broker-employer.  What split is retained by a broker and what split is received by a sales associates is usually agreed upon when they reach an employment agreement.


Q: Has HUD provided a clarification on how real estate broker and agent commission fees are to be disclosed under RESPA?

A: Yes.  HUD had stated, "All charges to sellers and buyers by real estate brokers and agents for their services in listing and selling the home ("commission") must be disclosed on Line 700 of the HUD-1 settlement statement.

Line 700: State the total amount of the commission for listing and selling the home (whether determined using a flat fee, a percentage of the sales price, or a combination of those methods).

Lines 701-702: State the division, if any, of the amount in Line 700 between the real estate brokers (or real estate agents, as applicable, when a real estate broker is not the party receiving the divided portion), and identify each receiving party.



Q: How Do I File a Complaint for a RESPA violation?

A:  As a REALTOR® member, if you see a settlement fee outside the percentage based commission and question whether it's an unreasonable fee for no work, nominal work or duplicate work, your client has the right to ask the title company to review this fee for RESPA compliance.  CLICK HERE to reference a quick summary of RESPA Sections 8 & 9 and learn how to file a complaint with HUD.  CLICK HERE for HUD's clarification letter on how real estate broker and agent commission fees are to be disclosed under RESPA. 


Q: Can a listing agent charge a fee to a buyer?  

A:  No.  HUD has determined, "it might be evidence of a RESPA violation if the listing broker charged the buyer an administrative fee when there was no contractual relationship between the listing broker and the buyer." 



Q: As a REALTOR®, can I charge a fee to assist my customer with preparing the necessary financial information to be considered for a loan modification or short sale?

A: As a REALTOR®, no.  Effective January 1, 2010, you would need to be licensed under Ch. 494, F.S. with the Florida Office of Financial Regulation to request a modification of the existing terms of the mortgage loan on behalf of your customer for financial gain.  The guidelines outlined under Sec. 494.00296, F.S., should be followed, which also prohibits receiving a fee before completing or performing all services included in the agreement with the customer.


Q: May I help my customer prepare the documents without charging a fee?

A: Both the Attorney General and the Office of Financial Regulation have determined that listing agents can enter into dialogue with the lender to see if a short sale offer would be acceptable, so long as the only remuneration sought is the real estate commission.  No additional fee is sought for the negotiation or dialogue with the lender.  Under these circumstances, the short sale negotiations appear to be ancillary to services provided by the real estate licensee in the sale of the customer's property.  Note: It is our opinion that assisting customers with document preparation for a short sale would also be considered ancillary; however, customers should submit all paperwork to the lender themselves so that the REALTOR® is not held liable for any information provided.


Q: If I know someone who is charging an upfront fee for loan modifications or short sales, what should I do?

A: This would be a violation of the foreclosure rescue consultant law.  You should report them by filing a complaint with the Office of the Attorney General.  Call 1-866-9-NO-SCAM or visit  When visiting this website, you can also find current investigations and litigation filed against offenders.  Attorneys licensed to practice law in this state who provides foreclosure rescue-related services as an ancillary matter to the attorney's representation of a homeowner as a customer are exempt from the foreclosure rescue consultant law.


Q: Can I charge a fee for a Broker Price Opinion (BPO)?

A: Yes.  While a BPO is not defined by Florida Statutes, a BPO is an opinion of the most accurate price for a distressed property, such as a property in foreclosure or one in which the seller is seeking the lender's approval for a short sale (in a short sale, the lender accepts less than the mortgage amount to enable a distressed homeowner to sell the property).  A BPO is not a certified appraisal.  In a certified appraisal, a specially trained appraiser uses standardized guidelines to determine a property's fair market value, or the price a willing buyer would pay and a willing seller would accept in an arms-length transaction.  In a distressed sale, the seller is either a homeowner under pressure to sell immediately because of financial distress or a lender not in the business of holding real estate.  Both situations typically result in a sales price lower than fair market value.  In addition to lenders, retirement fund advisors who oversee portfolios in which real estate is held and estates may hire real estate professionals to perform BPOs.

For more on BPOs, visit the website and log into Florida REALTORS®:


Q: Does H.R. 4173, which became law on July 21, 2010, limit the use of BPOs? 

A: H.R. 4173, the Dodd-Frank Wall Street Reform and Consumer Protection Act, did codify Freddie Mac's policy on the use of BPOs.  It states that in conjunction with the purchase of a consumer's principal dwelling unit a BPO may not be used as the primary basis to determine value.  This is still not a black and white statement on the use of BPOs.  For example, it's not clear yet how "principal dwelling unit" will be defined in the regulations.  You could say the same for "primary basis".  It is generally accepted that the language allows BPOs to be used to support other valuations (such as an appraisal or AVM).  We can expect little change from what we see in the world today.  For federal-related purchases transactions, appraisals have been the standard and this will not change.  BPOs are not, for the most part, used in purchase money transactions today and this law simply codifies that.  However, BPOs are permitted for use in short sales, loan modifications, refinances and foreclosures – this will not change with the new law.