Competition in the Real Estate Brokerage Industry - #14

Monday June 11, 2007

Commission Rates and Fees: Empirical Evidence

This section of the report is about seven pages of graphs, charts and numbers. They include data from studies going all the way back to the 1980's. The basic goal was to track commissions as they related to home sale prices and other variables.

It's pretty easy to get the information in these seven pages boiled down into a few bullets:

Though commission percentages have fallen from around 6% on average to 5.2%, the gross dollar amounts have risen due to increased home prices.

There has been little or no decrease in commission rates as the listing prices of homes have risen over time or over price brackets. In other words, rate for a $300k home was pretty much the same as the rate for a $600k home.

Though sales without a coop broker (in-house) showed a small drop in commission rate indicating some willingness to negotiate, it was very small.

Basically, the statements indicate that the view of the panel as that there has been little flexibility in commission rates with regards to market conditions and home prices.

Entire series: #1, #2, #3, #4, #5, #6, #7, #8, #9, #10, #11, #12, #13, #14, #15, #16, #17, #18, #19 & final