The $250 Question
Until now, that is, with the advent of Koenig & Strey’s buyer agreement fee, which operates in a fairly straightforward manner. The $250 fee is a part of Koenig’s standard exclusive or non-exclusive buyer agreement, and it is charged to the buyer only if they purchase a property; if they decide not a buy a residence, they do not owe Koenig the fee, though their agreement to exclusively work with Koenig does come with a term of one year. There is also an optional retainer, which operates more like an upfront commission and can be charged by the Koenig agent if he or she wishes (and thus, is not required). In the event of a purchase, the retainer is credited back to the buyer, but if the buyer does not decide to buy, the retainer is not refunded to them.

The controversy of the mandatory fee is largely lost on George Patrick, a broker with Koenig & Strey in Chicago’s Near North, downtown and Near West areas who had used buyer-broker agreements long before Koenig & Strey officially implemented its own on April 2. Before joining the company, Patrick was a broker with EXIT Team Realty for more than three years, and in his time there, buyer-broker agreements were a trademark of his business operations, though there was no fee associated with those agreements. However, because of his familiarity with agreements, Patrick says he is unfazed by the fee. In fact, he sees the fee as motivation for agents, more than anything else.

“It’s something that pushes us as agents to show the value we bring to the table,” Patrick says. “If somebody says, ‘Hey, why am I paying you $250?’ I feel like I have a response, which is, ‘You will get much more than $250 of value out of working with me as a real estate broker.’”

And the mandatory nature of the buyer fee, Patrick continued, is an essential component of the business model.

“It would probably be pointless if it was optional,” Patrick says. “We’re all consumers, and I don’t think any of us walk in to a business decision-making scenario and choose to pay for something that we can get if we don’t have to pay for it. So in that sense, I think if you’re going to do it, then it just has to be part of what you’re doing.”

Since Koenig’s implementation of the buyer fee agreement, Patrick has had nine buyers sign the form. Only one, he says, was initially hesitant, though he attributed any hesitation more to a natural uneasiness some people have with signing forms, not necessarily the nature of Koenig & Strey’s form. Patrick’s experience is consistent with that of other Koenig agents. Joe Stacy, the managing broker for Koenig’s Schaumburg office, says he has had approximately 15 buyer agreements signed thus far, and only one prospective buyer, an Internet lead who decided to take the paperwork home with him, has not yet responded. Jackson Sanderson, a vice president for Koenig and the managing broker for its Libertyville office, has had 10 buyers sign the agreement without any problems; Sanderson did have two buyers who were more tepid about the agreement, but as was the case with Patrick, their caution was with signing forms, not the specific fee associated with the agreement. Amidst the other closing costs of a real estate transaction, Sanderson says the $250 is simply not that big a deal to clients. “I think the Chicago Tribune and other media outlets that reported on this tried to make the $250 a bigger deal than it really is,” he says.

Patrick adds that going forward, he is not concerned with alienating any prospective clients with the fee given how many of his clients are first-time homebuyers who have never purchased without the fee.

The feasibility of Koenig & Strey’s fee becoming normal practice in Chicagoland’s market is the $250 question, but from Patrick’s perspective, such a development is part of the natural evolution of the industry. Coming from an IT background, Patrick says that real estate has changed drastically in the last 10 years with the advent of the Internet and all the technological changes it has inspired in the industry. Koenig & Strey’s buyer fee is just one more progression for real estate – and one that agents must accept.

“The business model of running a brokerage has been changing drastically, and I think agents have to understand that’s going to continue to happen,” Patrick says. “It’s a good opportunity for us in Chicago to professionalize our industry and really focus on what it is we do with and for our clients, and make sure that all sides are clear on how that works.”