The history of your sales commissions

I followed a white rabbit down a hole to figure out the past, present, and future of what commissions you earn from each home sale.

Good afternoon! Was this newsletter forwarded to you? Sign up here.  To all the agents in the house,   For the last month, I went down a rabbit hole to determine why the U.S. real estate commission structure is such a unique part of the American, and for that matter global, economy.   What I found is divided into a three-part series for HousingWire. Part one, which ran today, explores the history of residential real estate commissions, dating back to the first industry guidelines on the matter, set by the National Association of Realtors' forerunner in 1913.     Part two, running Thursday, explores the present legal challenges to the current commission model, and articulates the defense for 5-to-6% total commissions on home sales.   And the final part, set for Friday, examines alternative business models, the so-called discount brokerages, and the future of commissions.   The feedback of some of you who agreed to be quoted is included in these pieces. I'd encourage you to read these stories, and tell me where you think my history, or my interpretation of the present moment is correct or incorrect.    A few specific questions that come to mind from Part 1 -    - Commissions in the U.S. have gone down from 6% to 5% of a total home sale (or, from 3% to 2.5% per side) in the last 20 years. Yet even adjusted for inflation, agents make more now due to rising home prices.

Do you believe what you earn should be tied to the home sales price? Or should it be tied to other factors, like how much work you do (perhaps a fee for each service you provide)?

 

- In pure, cold economic terms, the interest of a buyer's agent is to find the most expensive home your client will be amenable to, and one with a high sales commission. When you represent buyers do you explain your economic incentives? Do you feel clients know how you earn money?

 

I am excited to hear your answers to these questions, and general thoughts. Please email me anonymously at mblake@housingwire.com

 

Sincerely,

Matthew Blake 

The 100-years-war over real estate commissions   In this special report, HousingWire plunges down the rabbit hole of residential real estate commissions, uncovering the past, present and future of this wholly unique part of the economy. HW+ Premium Content

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