The authors did not identify the source of the U.S. commission data. See NAR, Public Remark 208, at 15-16; Delcoure & Miller, supra, at 15. 173. Roughly half of the public remarks submitted to the Agencies in action to their ask for public remarks were some variation of a type letter that NAR made up, published on its website, and motivated its 1.
This letter praised the competitive nature of the genuine estate industry. Commenters using this form highlighted regional competitors between private agents as an impressive example of rigorous competitors to which the rest of the economy ought to aspire - how long does it take to get a real estate license. In addition, they claimed that the 10s of thousands of brokerages, more than 2 million licensed property specialists, and various organization models throughout the country offer customers with a good deal of choice.
realtor.org/law_and_policy/mls/ild/regulator_letters. html) for more details on the association's instructions and suggested content. 174. NAR, Public Comment 208, at 1 (remark). 175. Id. at 2. 176. Blann, Public Remark 250, at 1. However see NAR 2006 STUDY, supra note 4, at 74 (69% of sellers gotten in touch with only one representative; 74% of sellers found their agent through either a recommendation or a previous relationship with the agent).
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Reppert, Public Comment 294, at 1. See likewise Tradii, Public Remark 340, at 1; Wharton, Public Remark 179, at 1. 178. See, e. g., Earman, Public Remark 73, at 1-2 (typical commission is "well under 6%"); Giorgianni, Public Remark 200, at 1 (" My typical commission has 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 Real Patterns 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 Comment 254, at 1. 181. Id. at finance a timeshare 1. 182. Dwyer, Public Remark http://charlietish651.image-perth.org/how-to-get-your-real-estate-license-in-texas-for-beginners 55, at 1.
There are a range of options offered to buyers and sellers from complete service representatives to extremely limited service representatives with a wide array of charge structures."); Large, Public Comment 241, at 1 (" our average commission per deal side has actually dropped 13% this year compared to last year as a result of competitors from discount brokerage service models operating in our market").
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GAO REPORT, supra note 3, at 12. 184. As discussed in Chapter I of this Report, the commission "rate" is the percentage of the house sales price that the broker maintains as a commission, and commission "costs" are the total dollar quantity paid by customers genuine estate brokerage services.
185. Weicher, supra note 167, at 121. how to become a real estate agent in pa. 186. NAR a logical source of commission data, provided its size and access to MLS data through its local associations does not study or report commission rates. A NAR financial expert explained at the workshop that any average commission rate reported by a popular entity such as NAR could be utilized by industry participants as a focal point for collusion on commission rates.
at 225-26. See likewise NAR, Public Remark 208, at 12 (remark) (" [NAR] does not conduct research on commission rates out of issues that the research outcomes have the impact of setting a 'centerpiece' for professionals to set their commissions."). 187. Weicher, supra note 167, at 124. Weicher's computations utilize average house list prices, not typical house sales rates.
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Id. 189. See Hearing, supra note 1, at 5 (testament of David G. Wood), available at http://financialservices. house.gov/ media/pdf/072506dgw. pdf. 190. Id. at 6. 191. See Realogy Corporation 10-K for financial year ending Dec. 31, 2006, readily available at http://www. sec.gov/ Archives/edgar/data/ 1355001/000095012307003335/e31090e10vk. htm #tocpage. 192. A detailed evaluation of the empirical research performed in the realty brokerage market is beyond the scope of this Report.
Turnbull, Trends in Real Estate Research Study, 1988-2001: What's Hot and What's Not, 29 JOURNAL OF REAL ESTATE FINANCE AND ECONOMICS 47 (2004 ); John D. Benjamin, G. Donald Jud & G. Stacy Sirmans, What Do We Know About Real Estate Brokerage?, 20 JOURNAL OF PROPERTY RESEARCH STUDY 5 (2000 ). 193. 1983 FTC PERSONNEL 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, Expenses and Prices of Home Brokerage Services, 10 JOURNAL OF THE AMERICAN REAL ESTATE 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 price of the home decreases the commission rate by about 0. 5 portion points"). The typical list prices of an existing house in 1980 was $72,800. See U.S. Department of Real Estate and Urban Development, U.S.
2006) [hereinafter "HUD REPORT"], available at http://www. huduser.org/periodicals/ushmc/fall06/USHMC_Q306. pdf. At that price, the research study's analytical outcomes forecast a corresponding commission rate of 6. 25%, leading to a commission charge of $4,550. A home selling 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 locations with inadequate observations for new houses, in 59 percent of the staying market locations the mean commission rate paid was statistically significantly higher for existing houses than for new homes). 203. Id. 204. Id. at 248. 205. See William C. Goolsby & Barbara J.
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206. Id. at 84. 207. This finding was significant at the one percent level for each of the formulas checked. See id. at 83. Nevertheless, Weicher notes that the magnitude of the prices result seems little. See Weicher, supra note 167, at 121 (" Goolsby and Childs discover that the commission rate declines about 0.
11 percentage points for each $10,000 increase in home price, e. g., from 5. 90 percent to 5. 84 or 5. 79 percent."). 208. Goolsby & Childs, supra note 205, at 85. Considering that the authors just Find out more observed the cooperative commission rate, they keep in mind that their conclusion rests on the assumption 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 Pricing under Competitors, 41 JOURNAL OF URBAN ECONOMICS 102 (1997 ). This study obviously integrates the information and pertinent 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 contract commission rate was impacted by various market conditions and housing variables. As the authors discuss, the commission rate captured in the sample is "the agreement rate and therefore does not reflect any modification or changes that may be renegotiated in between the home seller and the agent at the time of sale." Id.
213. While it is not possible to quantify the relative inflexibility based on details reported by the authors, extra details can be used to calculate a rough approximation. Weicher, supra note 166, at 121, reports that Sirmans and Turnbull computed an average contract commission rate of 5. 8% in Baton Rouge over the duration 1985-1987.