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Sunday, February 25, 2024

Real Estate Commission Fallen

By Selena Maranjian

 If you’re planning on buying or selling a home, I’ve got good news for you: Commissions taken by real estate agents have been falling in recent years and are now, on average, around 5% compared to a historical average of around 6%. On a $250,000 home, that 1% difference amounts to $2,500 — not chump change.    The news is even better, actually. That’s because the 5% is an average, meaning that some people are paying even less than that. You may not have realized it, but real estate agent commissions are negotiable.    One reason for the drop is tied to the boom in housing prices in recent years. According to James Hagerty in The Wall Street Journal Online, “Residential real-estate commissions in the U.S. totaled $61 billion in 2004, up 42% from 2000, estimates Real Trends, an industry publication.” That wasn’t exactly good news for real estate agents, he explains, since their ranks boomed, too. The National Association of Realtors has seen its membership swell by some 63% since 2000, to roughly 1.25 million people. This was enough to drop the median annual income for Realtors by 4% between 2002 and 2004, to $37,600.    If you back up now and look at the big picture, you’ll see that in many cases, someone selling a house has more agents to choose between, so they should be more inclined to compete for the seller’s business — and that means being flexible on the commission rate. Indeed, according to a Real Trends/Harris Interactive survey, 62% of real estate brokerage firms are feeling pressured to negotiate commissions, and some 40% sense that competition is getting fiercer.    So should you sign up with the agent who offers you the lowest commission charge? Not at all. What you really want is the best agent you can find. Agent A might offer you the lowest rate, but Agent B might be more skilled, and if she manages to sell your home for a higher price, you may more than make up the difference in commission costs.Note: Also see Real Estate boom: https://csmsmagazine.org/news.php?pg=20050721I24

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