Homebuyer sues Keller Williams franchisee over fixed broker fee 

Another purported class-action suit is taking aim at the practice of brokerages charging consumers fixed transaction fees, also known as administrative or broker fees.

Buyer lawsuit seeks class status: On Oct. 19, homebuyer Gregory A. Deivert filed a complaint against Keller Williams Elite, the brokerage he had hired to represent him, over a $650 "broker fee" charged at the time of his October 2023 home purchase.

The complaint, which was filed in the Court of Common Pleas of Lancaster County Pennsylvania, alleges breach of fiduciary duty and violation of the Pennsylvania Unfair Trade Practices and Consumer Protection Law. The plaintiff is demanding a jury trial and seeking actual and compensatory damages, statutory damages, punitive damages, disgorgement of all fees collected, attorney fees and costs, and a permanent injunction barring the defendant from charging the fee.

The suit seeks class-action status on behalf of all buyers who, "during the fullest period allowed by law," were represented by Keller Williams Elite as a buyer's broker and paid the brokerage a flat "broker fee"  — or similar fixed fee — in addition to a percentage-based commission in a transaction where the brokerage was also paid by the seller or the seller's broker.

A 'cash grab'? Deivert alleges the $650 fee he was charged was "for nothing" and in addition to a 3% buyer broker commission paid by the seller. "The fee had no service behind it, no cost behind it, and no name that accurately describes it," the complaint alleges. "It is money taken from a client by the broker who was supposed to be looking out for him."

The fee "appeared on the closing statement for a home he had contracted to buy, with his deposit at risk, his financing in place, and his moving date set. A buyer in that position does not refuse to close over $650, even if that amount is a deceptively obtained cash grab," the filing adds.

Fee allegedly required by the firm: KW Elite, which represents "thousands" of homebuyers every year, allegedly instructs its agents to tell their buyer clients that the fee is mandatory and for "paperwork" or some other administrative purpose, according to the filing.

But "preparing those documents is not a service to the client that stands apart from brokerage; it is brokerage," the complaint argues. "It is also Defendant's own legal obligation. Pennsylvania law requires a broker to enter into a written agreement with a consumer before providing services, to provide the consumer with required disclosures, and to maintain its transaction records.

"A licensed broker cannot charge its client a separate fee for complying with the statute that licenses it," the filing argues.

A 'disturbing' fee 'pattern'? The complaint alleges that Keller Williams market centers nationwide "are engaged in a disturbing pattern of hiding and mislabeling the same junk fee under different names," including a $499 "Additional Broker Commission," a $395 "Compliance Fee" and a $595 "Selling Agent Broker Fee." 

That, the complaint contends, is "evidence that the fee is entirely made up and not reflective of any service actually provided: a fee that paid for an actual service would have a name that described the service and a price that reflected its cost."

'Junk' brokerage fees pop up often: These kinds of fees are relatively common but not clearly disclosed to buyers and sellers, according to a report published by the Consumer Policy Center (CPC) in July.

Like the conclusions drawn by CPC researchers, Deivert's complaint argues that such flat fees disproportionately harm lower-income and first-time buyers. "Multiplied across the transactions Defendant closes each year, the fee extracts substantial sums annually from Pennsylvania consumers for no service."

NAR says agents must act in clients' 'best interests': In August, a similar suit brought in June against Compass by buyers in Florida was dismissed without prejudice, meaning the case could be refiled at a later date. At the time that lawsuit first surfaced, a National Association of Realtors spokesperson offered guidance for members regarding consumer transaction fees

"Core to the [Realtor] Code of Ethics is the requirement that members must act in the best interests of their clients," the spokesperson said. "This includes explaining and disclosing all contracts related to the transaction in clear and understandable language and avoiding the misrepresentation of pertinent facts."

Real Estate News has reached out to Steve Brillhart, broker of record for KW Elite, for comment and will update this story if and when a response is received.