In some cases, whether you’re a buyer or a seller, your agent may ask you for an upfront, or pre-closing, payment. There isn’t necessarily anything wrong with this practice. In fact, the fee may be a part of a comprehensive plan by your agent that will give you an advantage over other buyers or sellers in your area. But make sure you ask your agent a few questions first:
1. Is some or all of the fee refundable if a transaction is consummated (i.e., the agent succeeds in selling your home or finding you a new one)?
2. What is the fee for? For sellers, is it to help market the property? For buyers, perhaps it’s a fuel surcharge if your agent will be shuttling you all over town? Or is it simply an “administrative” fee designed to increase broker revenues?
3. Is this fee charged by all agents who work for your broker, or just this particular agent?
4. Under what circumstances, if any, will the agent (or perhaps supervising broker) waive or negotiate the fee?
5. Perhaps most importantly, shop around! Are other agents in your area asking for an upfront fee? If so, is it in the same ballpark as your agent’s fee?