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March 2017   Volume 43, Number 3      
 

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Average Real Estate Commissions Decline to Low 5 Percent Range

According to new research, the average real estate commission paid on U.S. home sale transactions continues to decline and may dip below 5 percent within the next few years. Real Trends Consulting Inc., a research and advisory company, made this prediction after reviewing data on the sales and commission rates of 450,000 sales agents across the country. “We are headed for (a) sub-5 percent overall rate within the next few years,” said Steve Murray, Real Trends president, in an article in the column “The Nation’s Housing.”

The move to commission rates below 5 percent marks a sharp decline from the 1980s and early 1990s, when the standard real estate commission rate was 7 percent in some local markets.

Analysts attribute the decline in commission rates to increased competition among agents who work for brokerages (rather than being independent contractors), tech-savvy competing firms, shortages of available listings, and increased negotiations towards lower commission rates between brokers and agents.

According to survey data from the National Association of Realtors, 83 percent of recent buyers and sellers chose full-service brokers for their transactions, while just 17 percent chose brokers who offered limited services.

Traditional brokers argue that skimping on fees and working with discount firms have resulted in negative consequences for sellers, including poor marketing efforts, inadequate photography, inexperienced agents, and the risk of losing more money on the final sale price than a seller saves in fees. .

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In this issue:

How Trump’s Tax Plan Will Impact Real Estate

Average Real Estate Commissions Decline to Low 5 Percent Range

Consumer Sentiment Declines in January but Remains Near 13-Year High

Foreign Real Estate Investors Still Confident About U.S. Real Estate

Mortgage Applications Decline 12 Percent to End 2016

New Report Names CEO of Zillow as Most Powerful Person in Residential Real Estate

Rising Home Values Haven’t Shaken Consumers’ Memories of the Financial Crisis

U.S. Real Estate Sales Could Be Affected by China’s Capital Controls

Trump Administration Suspends Mortgage Premium Rate Cut

Keep an Eye Out for At-Risk Senior Clients

 


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