Inman News reports on a pretty disturbing trend: As home prices fall and sales volume remains weak in many markets, some real estate brokerages are resorting to charging "fees" to buyers and sellers -- on top of the usual commissions.

The fees are usually in the range of a few hundred dollars, but that isn't even the point. The point is that the fees are garbage -- absolute unfiltered, unmitigated, bullcrap. What exactly is the fee for? Inman says they are sometimes referred to as "administrative fees," "technology fees," "transaction fees," "flat fees," and administrative brokerage commission (ABC) fees."

The real estate brokers and agents involved in a transaction already collect a hefty commission for bringing together buyers and sellers. Inman reports that "Some who defend the fees say real estate brokerages need to recoup rising overhead expenses and investments in technology."

That I understand, but isn't that what the commissions are for? And while real estate brokerages are spending big to try to go high-tech, aren't there are also some serious cost savings associated with the internet? Agents are spending less money on newspaper advertising and online multiple listing services allow prospective buyers to browse homes on their own and then tell the agent which ones they want to see.
The worst part is that most of the money that brokerages are spending on technology and "rising overhead" is devoted to efforts to gain market share in the saturated market for real estate services: No one except the brokerage benefits from expensive "lead generation" investments.

If brokers were implementing flat fees as part of a plan to reduce commissions, I would understand -- in fact, I think it would be good. One of the great mysteries of real estate, to me at least, is the commission structure. Selling a $1 million home does not involve 10 times as much work as selling a $100,000 property, and does it really make sense for buyer's agents to get paid more for selling their clients more expensive houses?

Using flat fees to charge buyers and sellers for services that scale well -- a more expensive property might not require more expensive technology than a less expensive one -- is good for people buying or selling expensive homes.

But as it is, brokerages are just slapping on junk fees to underwrite their own efforts to attract new clients in a field where there is minimal differentiation between brokers.