June 5th, 2016
Here is a recent article in the Washington Post explaining that Commissions of 6 percent for home sales once were the norm. That’s changing. The article says:
Technology has changed businesses in ways that were unimaginable a decade ago, but even industry insiders say that residential real estate practices have yet to fully adapt to the reality that buyers and sellers have unlimited access to property listings and other information that was once held firmly in the hands of realty agents. That access has led many consumers to question the fees they pay for the services of an agent, commonly 6 percent of the home sales price, including payment to a buyer’s agent and a listing agent, or $30,000 on a $500,000 property sale.
This pressure on real estate commissions isn’t new. It’s been going on for a long while. The same day that Mike in North Carolina pointed this article out. Jordan in Minnesota pointed out the following:
It is such an interesting dynamic here. There is one single brokerage who markets 4% commission rates and nearly every agent is threatened by this and will lower their commission rate because of them… when the payout is only 4% (2% for listing side and 2% for selling side), nobody is spending any marketing dollars.
Another data point in this area is France. Recently Eric in France was wondering why there weren’t any real estate photographers in France. As I understand it, the reason is in France listings aren’t exclusive but rather many agents list the same property but only the one that sells the property actually gets paid so French listing agents don’t want to risk spending money on marketing. I think France is the only country that works this way.
Has anyone else noticed this increasing downward price pressure coming from discount brokerages?