New Fees in Store for Koenig & Strey Clients

by Chicago Agent

New fees at Koenig & Strey will affect both buyers and renters.

According to a breaking report from the Chicago Tribune, potential buyers and renters will have to deal with new fees from Koenig & Strey Real Living starting April 2.

Reported by Mary Ellen Podmolik, the fees would charge potential buyers a fee for working with Koenig & Strey Real Living agents and renters with commissions. Though such fees exist elsewhere in the U.S. (most likely to aid struggling company’s bottom lines), they are “virtually unheard of,” in Podmolik’s words, among Chicago area brokerages.

“This is part of a larger effort to improve our buyer processes,” said Mark Pullinger, a Koenig & Strey vice president, in Podmolik’s article. “We believe in being completely upfront with our clients, and want them to fully understand how our business works and how a buyer’s agent represents their interests.”

The fees will work at follows: Koenig & Strey clients will pay their buying agent an upfront retainer fee, the amount of which is set by the agent, but if the agent receives a commission from a purchase, the retainer is returned. Even if no retainer is set, though, the buyer still pays Koenig & Strey a $250 commission plus 2.5 percent of the purchase price. The company said that in most cases, that 2.5 percent will be covered by the listing agent’s co-op commission agreement, Podmolik wrote.

However, if no purchase is made under the original agreement, or the buyer makes an independent purchase, the agent keeps the retainer.

Also, for renters (because so many agents handle leases), a commission will be paid for the first year equal to one-half of one mont’s rent, and one-quarter of one month’s rent for the subsequent years on the lease.

Podmolik also writes that the next few weeks will be an observational period for Chicago real estate, as the fees are instituted. Will the fees become a new standard in the industry, as fees on bags did for airlines? Or will consumer backlash quash the measure, as what happened with debit card transaction fees?

What reception do you anticipate for the fees?

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  • Elizabeth Birch says:

    Shocking, what a ripoff.

  • Alec Hagerty says:

    I applaud this company… finally, a brokerage that’s willing to bite the bullet and do what is “right” and necessary! Buyers have, for far too long, been able to take advantage of R/E licensees (and they allowed them to) .. by “using” the agents and not being honest and sincere buyers! A true “ready, willing, able and right now” buyer will be willing to search and interview agents, then, make a viable commitment to that agent and the agent to them!
    As for the fee being paid by the selling agent… the truth is that the fee is being paid with the dollars a buyer brings to the table.. and, the real truth is that the fee was built into the “value” of the property.. as it is compared to other homes that have sold, that had a portion of the sales price committed to the R/E fee! Therefore, the fee truly is a “transaction fee” .. takes both the seller and the buyer to make it happen.
    This proposed retainer fee will weed out all the “look-ee-lous” and the “psychic vampires” that have plagued the weaker and less experienced agents for years! Good luck to this company… break the myths and paradigms and lead the industry to a new model!

  • What a brilliant move! Imagine asking people to pay for professional service – long overdue. Nobody gets to use a lawyer, doctor or computer technician – for free. Why should they assume to use hours, weeks, months of a buyer’s agent services for free. Or that the agent will always be compensated by the “other party”? This also clearly determines client-level service relationships – another smart move. Most of all, it could lead to better and more innovative services for buyers, since the company can set its own fees for service, and not depend upon the “compensation offered” by a listing agent to set the budget for what it might offer buyers.

    Super smart all around!

  • nick patterson says:

    Bravo fo K&S!! I hope it works out for them, its always hard to be the first to something. It really increases the professionalism of the brand and shows amazing confidence in their contracted Realtors. However, I would hate to be the managing broker when the calls come in from angry clients who paid a $250 retainer fee because their agent hasn’t called them back in 2 days demanding a refund.

  • In the New York marketplace many brokers have been charging buyers a retainer fee which is refunded when and if the buyer actually buys. Makes sense to me, especially with the cost of gasoline! Come on folks; what’s so wrong with this? Frankly the retainer fees seem like a bargain for the value of spending time with a skilled agent.

  • Joseph Marovich says:

    It has often been said: “Look at the pioneers. They’re the ones with the arrows in their backs.” I certainly hope that this pioneer becomes the successful leader in a professional business that has heretofore been giving away professional services. The winner here will be the public, if they sincerely do their homework and choose an agent that will represent their interests.

  • Absolutely LOVE IT!!! Dittos to what Alec Hagerty said…he is so wise and insightful. (and a bit of a ham, too.) I’m going to present this concept to my agents and see if they have the guts to be true professionals and try it here in our market in Mount Vernon, OH (Central Ohio). Another challenge…our market does not use Exclusive Buyers Agency contracts and this would be a great way to implement it. Could scare some buyers, but mostly the ones we want scared away…for now.

  • Banny Bar ,Montreal says:

    Yes it is a great concept. I been trying to do it for almost a year, and more than half of the buyers/renters refuse to sign the contract or pay the retainer. So I don’t work with them. Am I losing the “potential commission”? I do not think so, I am saving my time for qualified people,who deserve my time and my service. Go for it.

  • Sharon Harding says:

    Fabulous idea! It is only fair!
    Way back in the 1980’s a top Chicago suburban multi-office real estate company with many skilled agents charged a fee to buyers to be shown properties. Buyers and renters need to be loyal and honest. They can waste an agent’s time and gas and still not buy or rent anything.
    Realtors deserve just compensation!

  • jane powell says:

    I totally agree with this conception, which is not new, just is not in this Chicago area. Even though buyers/ renters may sign a buyer/rental exclusive they soon work out that we have to spend time and money to track them down to get paid anything if they go behind our backs.I even went to small claims myself because my then Managing Broker did not think that $2600 owed justified our corporate attorney attention. I won the case but without my company behind me I did not know how to proceed. Needless to say I left that Brokerage…. Paying a retainer to a Broker that will be returned when a buy/lease is consummated puts value on our work as Brokers hunt and preview suitable “finds” for our clients.JP

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