As one seller learned the hard way, flexible commissions doesn't always mean low commissions. Does the seller have a beef with finding out she paid more than the "standard commission"?

Here's what one reader writes:

"Dear Ms. Evans:

"On July 21, 2006, my 76-year-old mother listed her home in Plano, TX for sale with (name withheld) in Frisco, TX. She chose this agency because of a mailer she received from them stating they offered "flexible commission rates." Unfortunately, she did not read the contract she signed. She trusted the agent assuming the rates would be the standard 6 percent, if not less. At that time the agent did not discuss anything regarding the fees he would charge."

"On July 24, 2006 she received her first sales offer. The agent delivered a net sheet to her outlining the estimated costs she would have to pay and her estimated net profit from the sale. It was at that time she noticed that a 7 percent sales commission would be charged. Since she was never given a copy of the listing agreement she signed, I got involved and contacted Stuart questioning the fees and asking for a copy of the listing agreement be given to her along with a copy of the sales contract she signed … she was never given a copy of that, she was only left with a net sheet. After reading the listing agreement she realized by signing it she agreed to pay a 7 percent sales commission along with a $695 transaction fee at the time of closing."

"When property closed on Friday, September 1, 2006, her closing costs included not only the 7 percent commission and $695 transaction fee, but also an additional $500 fee for broker processing!"

"I believe my mother was completely misled in this situation. realize she should have been more careful and less trusting, but I also feel an agent who charges over the normal fees should make it clear right from the beginning. If he had legitimate reasons for the additional fees, why didn't he bring them to her attention? I feel the agent intentionally failed to give her a copy of the listing agreement. If she have been given a copy the very day she signed it she would have had time to read it at her leisure. She would not have chosen this agent to list her home if she was aware of the outrageous commission fees he would charge."

"I would like to know if she has any recourse in this matter. I also want to prevent others from unknowingly being taken advantage of like this. Thank you for any assistance you can provide. -- Patricia

Realty Times Responds:

Dear Patricia,

Let's answer the concerns in your letter one by one.

First, the standard 6 percent fee is a myth. There is no standard fee charged by Realtors, or the Federal Trade Commission would come down on the real estate industry like a hammer for price-fixing.

In fact, the FTC and Department of Justice are busy attempting to prove restraint of trade and other grievances against organized real estate and accusing the industry of fixing prices by stonewalling discounters and those with alternative business models, and as you and your mother found out the hard way, it simply isn't true. Brokers can charge what they wish for their services as long as the market will bear the costs, including adding on fees for transactions and broker processing.

I'll admit I'm baffled as to what the difference is between a transaction fee and broker processing fee, so in that respect it appears your mother may have been double-charged. To find out, simply call the brokerage, ask to speak with the broker in charge, and ask for an explanation of the fees.

It may help you to understand how the real estate industry works. A broker is licensed to oversee salespeople. The salespeople go out into the world and bring in contracts. When your mother signed her contract, it was with the broker. I believe from your letter that the agent who helped your mother was the broker-in-charge of his own firm, but this needs to be double-checked. Sometimes brokers sell their firms and stay on even though they no longer run the day-to-day operations.

That said, there must be some reason why she trusted this broker. You said she received advertising about flexible fees. If that's true, why wasn't there any negotiation at the listing presentation. If fees are "flexible" that means they have a range. Unless she named a percentage within that range, the broker assumed that she was willing to pay the full freight.

I can't defend or criticize what a broker chooses to charge for his services, but I will tell you that in a seller's market -- where homes move quickly -- fees tend to go down, and in a buyer's market where homes tend to sit, fees go up because of increased risk to the broker. In most markets, listing brokers split their commissions fifty-fifty with the buyer's broker (assuming there is one.) but in a buyer's market, you may find some listing brokers offering more than 50 percent. That's a reasonable explanation for why your mother was charged 7 percent.

Since we weren't present at the listing presentation, we don't really know what transpired. All we have is the listing agreement and the closing papers, which I assume your mother also didn't read.

Unfortunately, there's little recourse for someone who signs documents without reading them. However, there could be some way to dispute a "broker processing fee" if it were slipped onto the closing statement without your mother's knowledge.

If the broker processing fee was not included in the original fee estimate, you can contact the broker directly and simply ask for a refund of this fee. If that doesn't help, you need to decide how far you want to take this.

Is it a lesson learned, or do you want to stop this broker from ever harming another client? Nobody likes to hear about an older person being deceived, bullied or sold a bill of goods, and it's clear your mother didn't get what she was expecting. My question is how did it go so awry? What took place at the listing presentation and at the closing? Was anyone by her side at the closing?

You may have a good case, but only a good real estate attorney can tell you if the broker failed to act as your mother's fiduciary. He should have been looking out for her interests, but there's no law that says he can't charge fees if he wishes, so only a good attorney will know if it will be worth your while to take this further.

You can also file a complaint against the broker with the Texas licensing board (see ARELLO.org) and/or contact the Frisco Association of Realtors (see Realtor.com.) and file a request for arbitration. However, that will only work if the agent was a Realtor - a member of the National Association of Realtors. Realtors are subject to a Code of Ethics. Under Article 9, Realtors are required to provide a copy of the listing agreement, says Anchorage Realtor Neil Thomas. The fact that your mother's agent didn't suggests that the agent was not a Realtor.

You can also contact local news media and tell them what happened. They might like a story about agents adding unexpected fees to listing agreements and closing documents. I can see it on Channel 5 now.

Last, you can tell everyone you know how your mother was treated, including every Realtor you know. They will delight in using this information against a competitor.

On a personal note, you can see that it is easy for someone to take advantage of your mother. Unfortunately, it sounds as if she has reached the point that she needs a trusted person by her side to make sure that her next financial deal isn't so favorable to the other party.

Published: September 20, 2006

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Blanche is a renowned author of five real estate books. Her newest, Bubbles, Booms and Busts: Make Money In Any Real Estate Market, McGraw-Hill, was rave-reviewed by The New York Times. She was also selected from hundreds of real estate experts to contribute to Donald Trump's book, Trump: The Best Real Estate Advice I Ever Received: 100 Top Experts Share Their Strategies, Rutledge Hill Press, and is featured on page 68. Order Now Review - Honors In 2006, Blanche was selected among scores of candidates to author two consumer real estate guidebooks for the National Association of Realtors: The NAR Guide to Home Buying, and The NAR Guide to Home Selling, Wiley & Sons. She is currently planning two new books for the NAR and its members.       Known for her keen insight into real estate industry issues and for her ability to make complex subjects easy to understand, Blanche is a sought-after keynote and continuing education speaker. Real estate organizations from MLSs, to brokerages, to franchisors, to associations hire her to provide up-to-the-minute analysis of real estate industry news and advice on how to improve revenues. Her passionate delivery, peppered with stinging wit, is a huge hit with audiences and fans. Don Klein, CEO Greater Nashville Association of Realtors, Blanche Evans, Richard Courtney, president 2007, GRAR "The GNAR membership meeting last week featured Blanche Evans as the keynote speaker. Her comments and insights resonated extremely well with those in attendance and we have had many requests for copies of her PowerPoint Presentation. She was a terrific part of the membership meeting and convention program!" - Don Klein, CEO Greater Nashville Association of Realtors Coverage from WSMV, Nashville - 8-14-2007 That Interview Guy - Get Inside The Head Of Today's Generation 2007 AE Institute Session - To purchase 2006 AE Institute Session - Parts 1 2 3 4 5 6 7 8 9 HouseValues Mastermind call - Parts 1 2 Blanche's fireside chat with Jeremy Conaway, HAR - Click here. For more articles by Blanche, click here.