The authors did not identify 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 comments sent to the Agencies in reaction to their request for public comments were some variation of a type letter that NAR composed, published on its website, and motivated its 1.
This letter praised the competitive nature of the real estate market. Commenters using this form highlighted regional competitors in between private representatives as an impressive example of extensive competitors to which the remainder of the economy should strive - what is earnest money in real estate. In addition, they claimed that the tens of countless brokerages, more than 2 million certified realty professionals, and numerous service models throughout the nation supply customers with a good deal of option.
realtor.org/law_and_policy/mls/ild/regulator_letters. html) for more information on the association's guidelines and recommended material. 174. NAR, Public Remark 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 agent; 74% of sellers found their agent through either a referral or a prior relationship with the representative).
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Reppert, Public Comment 294, at 1. See likewise 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 Remark 200, at 1 (" My average commission has dropped over the last 10 years from 3% to about 2.
179. Paulsen, Public Comment 364, at 1. Several panelists and commenters mentioned Real Trends quotes of commission rates. See, e. g., Kunz, Tr. at 81-82; Lewis, Tr. at 172; NAR, Public Remark 208, at 12 (remark). 180. Lord, Public Remark 254, at 1. 181. Id. at 1. 182. Dwyer, Public Remark 55, at 1.
There are a range of choices available to purchasers and sellers from complete agents to very minimal service representatives with a wide array of fee structures."); Big, Public Comment 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 brokerage organization models operating in our market").
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GAO REPORT, supra note 3, at 12. popular timeshare companies 184. As talked about in Chapter I of this Report, the commission "rate" is the percentage of the house list prices that the broker maintains as a commission, and commission "charges" are the total dollar amount paid by customers for genuine estate brokerage services.
185. Weicher, supra note 167, at 121. how long does it take to get real estate license. 186. NAR a rational source of commission data, given its size and access to MLS information 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 might 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 (comment) (" [NAR] does not carry out research on commission rates out of concerns that the research study outcomes have the result of setting a 'focal point' for professionals to set their commissions."). 187. Weicher, supra note 167, at 124. Weicher's calculations utilize typical house prices, not average house list prices.
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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 ending Dec. 31, 2006, available at http://www. sec.gov/ Archives/edgar/data/ 1355001/000095012307003335/e31090e10vk. htm #tocpage. 192. An extensive evaluation of the empirical research carried out in the genuine estate brokerage market is beyond the scope of this Report.
Turnbull, Trends in Property Research Find more info Study, 1988-2001: What's Hot and What's Not, 29 JOURNAL OF PROPERTY FINANCE AND ECONOMICS 47 (2004 ); John D. Benjamin, G. Donald Jud & G. Stacy Sirmans, What Do We Know About Realty Brokerage?, 20 JOURNAL OF REAL ESTATE RESEARCH 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 Rates of Home Brokerage Providers, 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 increase in the rate of the house reduces the commission rate by about 0. 5 portion points"). The average prices of an existing home in 1980 was $72,800. See U.S. Department of Housing and Urban Advancement, U.S.
2006) [hereinafter "HUD REPORT"], readily available at http://www. huduser.org/periodicals/ushmc/fall06/USHMC_Q306. pdf. At that rate, the research study's statistical results forecast a corresponding commission rate of 6. 25%, causing a commission cost of $4,550. A house costing $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 (omitting 5 locations with insufficient observations for brand-new houses, in 59 percent of the remaining market areas more info 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 substantial at the one percent level for each of the formulas evaluated. See id. at 83. Nevertheless, Weicher notes that the magnitude of the sales price effect seems little. See Weicher, supra note 167, at 121 (" Goolsby and Childs discover that the commission rate decreases about 0.
11 portion points for each $10,000 boost in home cost, e. g., from 5. 90 percent to 5. 84 or 5. 79 percent."). 208. Goolsby & Childs, supra note 205, at 85. Given that the authors just observed the cooperative commission rate, they note 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 Rates under Competition, 41 JOURNAL OF URBAN ECONOMICS 102 (1997 ). This study apparently includes the data and appropriate findings of an earlier research study conducted 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 carried out regressions evaluating how the agreement commission rate was affected by various market conditions and housing variables. As the authors explain, the commission rate captured in the sample is "the agreement rate and therefore does not show any adjustment or changes that may be renegotiated between your home seller and the representative at the time of sale." Id.
213. While it is not possible to quantify the relative inflexibility based on information reported by the authors, extra details can be utilized to calculate a rough approximation. Weicher, supra note 166, at 121, reports that Sirmans and Turnbull computed an average agreement commission rate of 5. 8% in Baton Rouge over the period 1985-1987.