B-173091, JUN 22, 1971

B-173091: Jun 22, 1971

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INASMUCH AS THE FHA SCHEDULE WHICH INDICATES A PREVALING FEE RATE OF 6 PERCENT WAS COMPILED NEARLY A YEAR BEFORE THE SALE HERE INVOLVED. KREGGER'S CLAIM FOR THE ADDITIONAL ONE PERCENT IS ALLOWED. FARRALL: THIS IS IN REFERENCE TO YOUR LETTER OF MAY 24. KREGGER FOR REIMBURSEMENT OF $360 WHICH WAS PAID BY HIM AS PART OF A REAL ESTATE BROKER'S FEE IS PROPERLY REIMBURSABLE. A BROKER'S FEE OR REAL ESTATE COMMISSION PAID BY THE EMPLOYEE FOR SERVICES IN SELLING HIS RESIDENCE IS REIMBURSABLE BUT NOT IN EXCESS OF RATES GENERALLY CHARGED FOR SUCH SERVICES BY THE BROKER OR BY BROKERS IN THE LOCALITY OF THE OLD OFFICIAL STATION. *** " DISALLOWANCE OF THE 1 PERCENT DIFFERENTIAL WAS PREDICATED ON ADVICE RECEIVED FROM THE FEDERAL HOUSING ADMINISTRATION (FHA) OFFICE IN DENVER.

B-173091, JUN 22, 1971

CIVILIAN EMPLOYEE - PURCHASE OF RESIDENCE - BROKERAGE FEE ALLOWING CLAIM OF WILLIAM C. KREGGER, FOR THE DIFFERENCE BETWEEN THE 7 PERCENT COMMISSION ACTUALLY PAID BY HIM AS A BROKERAGE FEE FOR THE SALE OF HIS RESIDENCE INCIDENT TO HIS TRANSFER TO PUEBLO, COLO., AND THE 6 PERCENT COMMISSION FOR WHICH REIMBURSEMENT HAS ALREADY BEEN MADE. OMB CIRCULAR NO. A-56, SECTION 4.2A ALLOWS FOR REIMBURSEMENT OF BROKERAGE FEES BUT NOT IN EXCESS OF RATES GENERALLY CHARGED FOR SUCH SERVICES. INASMUCH AS THE FHA SCHEDULE WHICH INDICATES A PREVALING FEE RATE OF 6 PERCENT WAS COMPILED NEARLY A YEAR BEFORE THE SALE HERE INVOLVED, AND A SURVEY REVEALS THAT 70 PERCENT OF THE REALTORS IN THE DENVER AREA NOW CHARGE A FEE OF 7 PERCENT. MR. KREGGER'S CLAIM FOR THE ADDITIONAL ONE PERCENT IS ALLOWED.

TO MR. HAROLD J. FARRALL:

THIS IS IN REFERENCE TO YOUR LETTER OF MAY 24, 1971, IN WHICH YOU REQUEST OUR DECISION WHETHER THE CLAIM OF MR. WILLARD C. KREGGER FOR REIMBURSEMENT OF $360 WHICH WAS PAID BY HIM AS PART OF A REAL ESTATE BROKER'S FEE IS PROPERLY REIMBURSABLE. THE $360 AMOUNT REPRESENTS THE DIFFERENCE BETWEEN THE 7 PERCENT COMMISSION ACTUALLY PAID BY MR. KREGGER AS A BROKERAGE FEE FOR THE SALE OF HIS RESIDENCE AT HIS OLD OFFICIAL STATION INCIDENT TO HIS TRANSFER TO PUEBLO, COLORADO, AND THE 6 PERCENT COMMISSION FOR WHICH REIMBURSEMENT HAS ALREADY BEEN MADE.

OFFICE OF MANAGEMENT AND BUDGET CIRCULAR NO. A-56, DATED JUNE 26, 1969, PROVIDES AT SUBSECTION 4.2A, WITH RESPECT TO THE REIMBURSABILITY OF BROKERAGE FEES AND REAL ESTATE COMMISSIONS, AS FOLLOWS:

"A. BROKER'S FEES AND REAL ESTATE COMMISSIONS. A BROKER'S FEE OR REAL ESTATE COMMISSION PAID BY THE EMPLOYEE FOR SERVICES IN SELLING HIS RESIDENCE IS REIMBURSABLE BUT NOT IN EXCESS OF RATES GENERALLY CHARGED FOR SUCH SERVICES BY THE BROKER OR BY BROKERS IN THE LOCALITY OF THE OLD OFFICIAL STATION. *** "

DISALLOWANCE OF THE 1 PERCENT DIFFERENTIAL WAS PREDICATED ON ADVICE RECEIVED FROM THE FEDERAL HOUSING ADMINISTRATION (FHA) OFFICE IN DENVER, COLORADO, THAT THE BROKERAGE FEE CUSTOMARILY PAID IN THAT AREA WAS 6 PERCENT OF THE SELLING PRICE. THE "SCHEDULE OF CLOSING COSTS FOR USE IN THE STATE OF COLORADO" WHICH WAS FURNISHED TO YOUR OFFICE BY THE FHA INDICATES A TYPICAL CHARGE OF 6 PERCENT. WE NOTE THAT THIS SCHEDULE WAS PREPARED ON MAY 6, 1970.

MR. KREGGER'S LETTER OF MARCH 29, 1971, INDICATES THAT BEFORE ENGAGING THE REAL ESTATE FIRM WHICH SOLD HIS RESIDENCE, HE HAD INQUIRED OF SEVERAL REALTY COMPANIES, EACH OF WHICH QUOTED A FEE OF 7 PERCENT. YOUR OFFICE HAS ASCERTAINED ON THE BASIS OF A SURVEY OF 30 REALTY COMPANIES THAT AT THE TIME OF THE SALE OF MR. KREGGER'S RESIDENCE, APPROXIMATELY 70 PERCENT OF THE REALTORS IN THE DENVER METROPOLITAN AREA WERE CHARGING A COMMISSION OF 7 PERCENT.

INASMUCH AS THE FHA SCHEDULE WHICH INDICATES A PREVAILING FEE RATE OF 6 PERCENT WAS COMPILED NEARLY A YEAR BEFORE THE SALE HERE INVOLVED, WE FEEL THAT THE RECORD SUPPORTS THE FINDING THAT THE 7 PERCENT FEE PAID BY MR. KREGGER WAS NOT IN EXCESS OF RATES GENERALLY CHARGED FOR SUCH SERVICES BY BROKERS IN THE DENVER AREA.

ACCORDINGLY, THE VOUCHER WITH ACCOMPANYING PAPERS WHICH YOU ENCLOSED WITH YOUR LETTER IS RETURNED HEREWITH AND MAY BE CERTIFIED FOR PAYMENT IF OTHERWISE CORRECT.