When you go to buy or sell a home, you either have the option of doing so by yourself, with no representation from a professional in the field; or you can hire a real estate agent to help and guide you through the process.
The choice is completely up to you.
Most people in today’s marketplace are forgoing the option of selling their home on their own (a For Sale By Owner, FSBO), and are instead choosing to employ a licensed real estate agent to help them sell their home and for the best price.
But one interesting trend that is currently emerging in the market is the fact that the commissions that real estate agents are used to seeing are slowly getting smaller with time.
What does this mean?
Well, one thing this data shows is that consumers are becoming more educated about real estate transactions in general, and are probably negotiating with their agent about the commission they should receive at the end of the transaction.
A recent article by Jeff Ostrowski of The Palm Beach Post, “Realtors’ 6% commissions dip below 5%,” discusses how the money paid to both buyer’s agents and seller’s agents are getting smaller.
The findings come from a study done by one of the nation’s largest real estate brokers.
“Real estate commissions are steadily falling, and the oft-cited, oft-debated industry standard of 6 percent is becoming a distant memory, according to little-noticed numbers the nation's largest real estate broker released this month.”
“Realogy Corp.'s annual report shows that the average ‘commission side’ -- the amount paid to either the seller's or buyer's agent -- dipped below 2.5 percent in 2006.”
Normally, the buyer’s agent and seller’s agent will split the commissions when a transaction is completed. With this being said, these numbers mean that the overall commission was now down to below 5 percent; with 2.5 percent going to each individual
“Don't feel too bad for Realogy and its thousands of agents. Thanks to soaring home prices, their take from real estate transactions has risen. Even as Realogy's commission rates fell over the past five years, the average dollar amount per commission side rose to $12,691 in 2006 from $8,535 in 2002.”
“The stakes are high, both for the nation's million-plus Realtors and for consumers, who pay an estimated $60 billion-plus a year for real estate brokerage fees. On a $400,000 sale, a 6 percent commission amounts to $24,000, while a 5 percent commission is $20,000.”
Right now, the data from Realogy Corp. is the only data that is being released about real estate agent commissions, so it will be interesting to see what other major brokerage firms are saying about their commissions.
But coming from one of the nation’s largest firms, may believe that commissions will be lower for pretty much everyone in the field, regardless of their company affiliation. The “Realogy report is noteworthy partly for the company's sheer size. Parsippany, N.J.-based Realogy owns a number of brokerages, including Coldwell Banker Residential Real Estate, the largest brokerage in Florida. Realogy also franchises the Century 21, ERA, Coldwell Banker and Sotheby's International brands.”
Back to news articles |
