top of page
Writer's pictureOasis Singleton

Who Pays the Transaction Coordinator in Real Estate? TC Fees and RESPA Violations

Updated: Mar 22


TC working on real estate

The role of a Transaction Coordinator is pivotal for any real estate agent. They ensure that transactions run smoothly, paperwork is in order, and all parties are aligned. But a common question arises: Who foots the bill for the TC's services? Let’s discuss the pros and cons of charging a TC fee directly to clients and how to navigate this aspect of real estate transactions.


Understanding the Role of a Transaction Coordinator


A Transaction Coordinator is a specialized professional who manages the administrative aspects of real estate transactions. Their duties range from verifying contracts completion, coordinating with various parties, ensuring timely document submissions, to assisting with the final closing. Their role is to streamline the process, ensuring that no detail is overlooked.


Who Benefits from a Transaction Coordinator?


Every party involved in a real estate transaction benefits from a TC's services. From buyers and sellers to agents and lenders, a TC ensures that the process is seamless. A single missing document or a missed deadline can stall a transaction, making the TC's role crucial for the success of the deal. How do you know if you need a TC?


Who Pays the Transaction Coordinator?


The responsibility of paying the TC's fee can vary based on several factors:


- For Sale By Owner (FSBO): In cases where a property is sold directly by the owner without involving agents, the seller typically pays the TC's fee. The TC assists the seller in understanding required documents and helps to ensure that the escrow process is smooth.


- Buyer & Listing Agent: If a real estate agent hires a TC, it is up to the agent and potentially their clients as to who pays this fee.


- In-House TC: Some brokerages have an in-house TC that they employ or contract. Depending on the commission structure, the broker or the agent might cover the TC's fee.



Want more information like this sent directly to your inbox?


Pros and Cons of Charging a TC Fee Directly


Pros:

1. Lowers Agent Expenses: By charging the TC fee directly to the clients, agents can pass on specific operational costs instead of absorbing them into their own overhead. This approach gives agents more financial leeway to invest in other aspects of service delivery, like marketing or client acquisition, which can ultimately benefit the clients through more robust and attentive service.

 

2. Builds Accountability: Separating the TC fee encourages a culture of accountability within the real estate transaction. With a distinct charge, clients can readily identify the Transaction Coordinator's role and hold them accountable for delivering high-quality service. This accountability structure also encourages TCs to maintain high performance standards, knowing that their work is recognized as a unique aspect of the transaction.


3. Enhances Service Transparency: By itemizing the TC fee, agents can provide clients with a clear breakdown of all services rendered throughout the transaction. This level of transparency not only demystifies the process but also helps clients understand the value they are receiving from the Transaction Coordinator's specialized skills and contributions.


Cons:

1. Perception: Some clients may perceive the TC fee as an extra burden, believing it's an expense the agent should absorb. This can sometimes lead to the misconception that they're being "nickel and dimed."


2. Potential for Disputes: Ambiguities in fee structures or services can lead to misunderstandings. If the TC's role and fees aren't clearly outlined from the outset, it might result in disputes during the closing phase.


3. Allowance: Not all brokerages or real estate firms permit agents to charge a separate TC fee. Some have strict guidelines or policies in place that dictate how transaction coordination is billed. Agents need to be aware of their brokerage's stance on this matter to ensure compliance and avoid potential conflicts.



transaction coordinator for real estate


Separating the TC Fee:

 While there's no legal restriction against charging a separate TC fee, it must be clearly disclosed in the agency representation agreement. However, some professionals view this as an "unethical" or "nickel and dime" approach.


RESPA Violations and TC Fees

The Real Estate Settlement Procedures Act (RESPA) ensures that consumers are provided with detailed information about their real estate transaction costs. Charging undisclosed fees or receiving unearned fees could lead to violations. It's crucial to ensure that any TC fee charged is clearly outlined and agreed upon prior to starting an active escrow. For a more thorough understanding of how to properly structure fees, it's advisable to consult with your broker. Specifics may involve a dedicated addendum or explicit mentions of the fee within the contractual agreement.


The role of a Transaction Coordinator is undeniably essential in real estate transactions. While the question of who pays their fee can vary, what's clear is the value they bring to the table. If you decide to charge a TC fee directly to your clients, ensure transparency, clear communication, and adherence to all legal guidelines. Numerous parties collaborate in real estate transactions to achieve successful outcomes and fulfill individuals goals. Locating or even training a good TC is an asset to agents, their clients and everyone involved in the transaction.


Find out how TC's can save brokers money on their E&O insurance HERE


At AIDE, we believe in providing value and education to our clients. Our approach is rooted in support, teamwork, and continuous education. If you have any questions or need guidance on real estate transactions in California, we're here to help.

163 views0 comments

Comments

Rated 0 out of 5 stars.
No ratings yet

Add a rating
bottom of page