To all the agents in the house,
"Real estate commissions in the United State are two to three times higher than in comparable international markets."
So reads a lawsuit filed in federal court earlier this month by Austin, Texas-based brokerage Real Estate Exchange, or REX, against Zillow and the National Association of Realtors. REX is citing a Brookings Institution study in making its claim — a report that calls the U.S.'s uniquely high commission rates "puzzling."
Seemingly in response to the REX lawsuit, a settlement in November with the U.S. Justice Department Antitrust Division, and four additional lawsuits (including one in Chicago federal court that has withstood NAR's motion to dismiss the case), NAR President Charlie Oppler has spoken out to defend the status quo of commission rates that are 5-6% of a home's sale price. Sort of.
Oppler released a statement two weeks ago, "Regarding the real estate commission structure," that stressed the need for buyer and seller agents to continue splitting the total 5-6% commission. But Oppler said nothing at all about what percentage of a home's sale price that the agent should keep, which is the very crux of the aforementioned lawsuits.
In the words of John McLaughlin, "Issue One!" Which is: Are the parade of lawsuits, recent DOJ settlement, and new wave of self-styled discount brokerages like REX a real threat to the current commission rate?
I'm a bit wanting for historical context on this one. Because to me, it seems like the attack on present commission rates is a BIG DEAL, threatening all that NAR has fought for on behalf of its members (and opponents would argue, at the expense of consumers). But does this kind of threat crop up every few years just to die down?
And, issue two! Should commission rates be revisited?
Might you prefer a looser commission system that could allow you to better negotiate rates or could get paid based on the time you put in working on a sale? It seems now — with crazy-high demand and crazy-low inventory -— that listing agents could spend a few hours on a $500,000 home sale, while buy-side agents might spend a few months.
Or is the present commission rate sacrosanct, a needed element of security in an otherwise insecure business?
Please share your thoughts, anonymously, of course, at mblake@housingwire.com. And thank you for the helpful responses on whisper listings, look for a HousingWire story on that soon.
Sincerely,
Matthew Blake
Senior Real Estate Reporter
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