The authors did not determine the source of the U.S. commission information. See NAR, Public Comment 208, at 15-16; Delcoure & Miller, supra, at 15. 173. Around half of the general public remarks sent to the Agencies in action to their request for public remarks were some variation of a form letter that NAR made up, posted on its site, and motivated its 1.
This letter praised the competitive nature of the property market. Commenters utilizing this form highlighted local competition in between private agents as an exceptional example of strenuous competition to which the rest of the economy need to aim - how much do real estate agents make per sale. In addition, they declared that the tens of countless brokerages, more than 2 million licensed genuine estate experts, and various service models throughout the nation provide customers with a good deal of choice.
realtor.org/law_and_policy/mls/ild/regulator_letters. html) for more information on the association's instructions and recommended content. 174. NAR, Public Comment 208, at 1 (comment). 175. Id. at 2. 176. Blann, Public Remark 250, at 1. But see NAR 2006 SURVEY, supra note 4, at 74 (69% of sellers called just one representative; 74% of sellers discovered their agent through either a recommendation or a previous relationship with the agent).
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Reppert, Public Remark 294, at 1. See also Tradii, Public Comment 340, at 1; Wharton, Public Comment 179, at 1. 178. See, e. g., Earman, Public Comment 73, at 1-2 (typical commission is "well under 6%"); Giorgianni, Public Comment 200, at 1 (" My average commission has actually dropped over the last 10 years from 3% to about 2.
179. Paulsen, Public Remark 364, at 1. A number of panelists and commenters mentioned Genuine Trends estimates of commission rates. See, e. g., Kunz, Tr. at 81-82; Lewis, Tr. at 172; NAR, Public Comment 208, at 12 (comment). 180. Lord, Public Remark 254, at 1. 181. Id. at 1. 182. Dwyer, Public Remark 55, at 1.
There are a range of options offered to timeshare purchasers and sellers from complete representatives to really restricted service agents with a variety of cost structures."); Large, Public Remark 241, at 1 (" our average commission per deal side has dropped 13% this year compared to last year as a result of competition from discount rate brokerage company models operating in our market").
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GAO REPORT, supra note 3, at 12. 184. As talked about in Chapter I of this Report, the commission "rate" is the portion of the house list prices that the broker chuck wesley retains as a commission, and commission "fees" are the total dollar amount paid by consumers for genuine estate brokerage services.
185. Weicher, supra note 167, at 121. how to generate leads in real estate. 186. NAR a sensible source of commission information, offered its size and access to MLS data through its local associations does not study or report commission rates. A NAR financial expert discussed at the workshop that any typical commission rate reported by a popular entity such as NAR might be utilized by market individuals as a centerpiece for collusion on commission rates.
at 225-26. See likewise NAR, Public Comment 208, at 12 (remark) (" [NAR] does not perform research study on commission rates out of issues that the research results have the effect of setting a 'centerpiece' for specialists to set their commissions."). 187. Weicher, supra note 167, at 124. Weicher's estimations use typical house list prices, not median home sales prices.
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Id. 189. See Hearing, supra note 1, at 5 (testimony of David G. Wood), readily available at http://financialservices. house.gov/ media/pdf/072506dgw. pdf. 190. Id. at 6. 191. See Realogy Corporation 10-K for ending Dec. 31, 2006, offered at http://www. sec.gov/ Archives/edgar/data/ 1355001/000095012307003335/e31090e10vk. htm #tocpage. 192. A thorough evaluation of the empirical research study carried out in the property brokerage industry is beyond the scope of this Report.
Turnbull, Trends in Realty Research Study, 1988-2001: What's Hot and What's Not, 29 JOURNAL OF REALTY FINANCING AND ECONOMICS 47 (2004 ); John D. Benjamin, G. Donald Jud & G. Stacy Sirmans, What Do We Know About Realty Brokerage?, 20 JOURNAL OF PROPERTY RESEARCH 5 (2000 ). 193. 1983 FTC STAFF REPORT, supra note 9, at 45.
Id. 195. Id. at 46 (49. 6% of sample paid 6%, while 27. 9% paid 7%). 196. Id. at 48. 197. Id. at 52. 198. See Michael Carney, Costs and Prices of Home Brokerage Services, 10 JOURNAL OF THE AMERICAN PROPERTY AND URBAN ECONOMICS ASSOCIATION 331 (1982 ). 199. Id.
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200. Id. at 336. 201. Id. at 348 (" [O] n average, a $100,000 rise in the rate of the house reduces the commission rate by about 0. 5 percentage points"). The average prices of an existing home in 1980 was $72,800. See U.S. Department of Real Estate and Urban Development, U.S.
2006) [hereinafter "HUD REPORT"], readily available at http://www. huduser.org/periodicals/ushmc/fall06/USHMC_Q306. pdf. At that cost, the research study's analytical results predict a corresponding commission rate of 6. 25%, resulting in a commission fee of $4,550. A home offering for $100,000 more, or $172,000, would pay a commission rate of 5. 73%, for a commission cost of $9,901.
Carney, supra note 198, at 339 (leaving out 5 areas with insufficient observations for brand-new homes, in 59 percent of the remaining market locations the mean commission rate paid was statistically considerably higher for existing houses than for new homes). 203. Id. 204. Id. at 248. 205. See William C. best timeshare to buy Goolsby & Barbara J.
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206. Id. at 84. 207. This finding was substantial at the one percent level for each of the equations checked. See id. at 83. However, Weicher notes that the magnitude of the sales price result appears to be little. See Weicher, supra note 167, at 121 (" Goolsby and Childs find that the commission rate declines about 0.
11 portion points for each $10,000 increase in home cost, e. g., from 5. 90 percent to 5. 84 or 5. 79 percent."). 208. Goolsby & Childs, supra note 205, at 85. Since the authors just observed the cooperative commission rate, they keep in mind that their conclusion rests on the presumption that the cooperative split is a fixed share of the total listing commission.
See id. at 81 n. 1. 209. See C.F. Sirmans & Geoffrey K. Turnbull, Brokerage Prices under Competition, 41 JOURNAL OF URBAN ECONOMICS 102 (1997 ). This study apparently incorporates the information and relevant findings of an earlier study performed by the authors. See C.F. Sirmans, Geoffrey K. Turnbull & John D.
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210. Sirmans & Turnbull, supra note 209, at 111. 211. Id. at 113-115. 212. Id. at 113-14. The authors performed regressions evaluating how the agreement commission rate was impacted by various market conditions and real estate variables. As the authors discuss, the commission rate recorded in the sample is "the contract rate and for that reason does not reflect any change or modifications that might be renegotiated between the house seller and the representative at the time of sale." Id.
213. While it is not possible to measure the relative inflexibility based upon info reported by the authors, supplemental info can be utilized to calculate a rough approximation. Weicher, supra note 166, at 121, reports that Sirmans and Turnbull calculated a typical agreement commission rate of 5. 8% in Baton Rouge over the duration 1985-1987.
