Part 2: Real Estate Commission Facts | News, Sports, Jobs


Last week, I explained why brokers representing home sellers often pay the commission of brokers representing home buyers. This is the second part of the answer to this question, along with other commission information.

• Commissions are always negotiable. The seller decides what fees he is willing to pay for the services of his broker and how much that listing broker should offer to a broker bringing in a buyer to complete the transaction. Commissions can be negotiated at any time during the transaction, including at the start and any time before the close of the transaction.

• Broker cooperation benefits consumers. The cooperation of brokers in the commission process leads to brokers sharing their inventory among themselves. In turn, this means sellers have access to the largest possible pool of potential buyers and buyers have access to the most housing options in one place.

• Commissions cannot be included as part of a mortgage loan. The vast majority of mortgage lenders do not allow fees to be added to home loans. Listing broker compensation offers to buyer’s brokers give first-time home buyers and low- and middle-income buyers a better chance of affording a home and professional representation in the home buying process.

For many buyers, saving for a down payment is hard enough, if buyers had to pay real estate commissions out of pocket on top of closing costs, it would further push back the dream of home ownership for countless people.

• Commission rates are determined by market forces. Commissions fluctuate over time and have notably decreased steadily in recent years. In fact, in 2020, the average real estate commission in the United States fell to a new low of 4.94%, according to Real Trends.

• In for money. Local MLS broker marketplaces allow smaller brokerages to compete with larger ones and provide unprecedented competition among brokers, including different service and pricing models. Thus, you can choose from many commission models. As with other things, you can expect someone with reduced commissions to provide a different level of service. These are choices to consider as you prepare to make probably the most important investment of your life.

• The US real estate market is the global standard. The American real estate model has long been considered the friendliest in the world. Overseas buyers are forced to wade through complex marketplaces that force consumers to work with multiple brokers to access fragmented inventory because listings are not freely shared in the marketplace. The result is more time-consuming, impersonal and expensive.


1. Is there a “fixed fee” real estate brokers charge consumers?

No. The market decides commission rates, and commissions are always negotiable. Consumers have a choice of who they want to pay and how they want to pay them. Due to the pro-consumer local MLS broker market model and options such as success fees, there is unprecedented competition among real estate brokers, particularly in the service and commission options available for consumers.

2. Why not require buyers to pay commissions directly to their broker instead of the historical practice of listing brokers compensating the buying broker?

Forcing buyers to bear the additional costs would cause them incredible hardship and lock many buyers, especially first-time buyers and low- and middle-income buyers, out of an already competitive market. It could also force buyers to forego professional help in what is probably the most complex and consequential transaction they will ever make.

3. How does the US model compare to other international broker marketplaces?

The American approach is the most consumer-centric model. By consolidating fees and the overall process, our country’s model simplifies the experience, provides greater certainty of success for buyers and sellers, and provides guidelines that ensure the accuracy of the inventory of homes being updated. available to real estate professionals and consumers, all at comparable or lower prices. total costs than those of other countries.

4. Why should real estate professionals make so much money in commissions when so much information is available online?

Real estate brokers provide essential advice for consumers to navigate the legal, financial and community aspects of a purchase, including everything from determining property value to negotiating the price. They also make local broker markets possible, which online housing portals tap into, thanks to all the information they enter into these databases. And the annual income of real estate agents is only $43,330 and 88% are small businesses, the majority of which are owned by women.

5. How does the current fee approach benefit small businesses?

Access to inventory and free advertising along with the practice of the listing broker paying buyer’s brokers’ commission encourages participation in these local real estate markets and creates the largest, most accessible source of housing information. and most accurate available to consumers. This levels the playing field between brokerages, allowing smaller brokerages to compete with larger ones, and provides unprecedented competition among brokers, including different service and pricing models for consumers.

(Republished from the National Association of Realtors)

Marlin Palich is President of Stark Trumbull Area Realtors, which serves Trumbull, Stark and Carroll counties.

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