Commission Rates Falling
A MSNBC article reports that real estate commission rates are falling across the U.S. Historically, the average commission has trended around 6%; however, recent information suggests that 5% is now the norm. It doesn’t appear to end there either as more and more home sellers and buyers are negotiating commission rates. In fact, a Real Trends/Harris Interactive survey found that 62% of real estate brokerage firms are feeling pressured to negotiate commissions, and 40% sense that competition is getting fiercer.
This is no paranoid observation on their part as the ranks of real estate agents have swelled during the past five years. The influx of real estate agents not only raised the bar on competition but impacted other areas as well. For example, the industry publication, Real Trends estimates that residential real-estate commissions in the U.S. totaled $61 billion in 2004, up 42% from 2000. Furthermore, the NAR has evidence to suggest that the median annual income for Realtors dropped by 4% between 2002 and 2004, to $37,600. In short, more agents, more competition and a slower market.
Anyone care to hazzard a guess as to how the slowing housing market will impact the life of a real estate agent/broker in the next six to twelve months?