The authors did not determine 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 sent to the Agencies in action to their request for public remarks were some variation of a kind letter that NAR composed, posted on its website, and motivated its 1.
This letter praised the competitive nature of the real estate industry. Commenters using this type highlighted regional competitors in between private agents as an outstanding example of rigorous competitors to which the remainder of the economy should aspire - how to invest in real estate with little money. In addition, they claimed that the tens of thousands of brokerages, more than 2 million certified genuine estate experts, and numerous organization models across the country supply customers with an excellent deal of option.
realtor.org/law_and_policy/mls/ild/regulator_letters. html) for more details on the association's guidelines and suggested material. 174. NAR, Public Remark 208, at 1 (remark). 175. Id. at 2. 176. Blann, Public Comment 250, at 1. But see NAR 2006 SURVEY, supra note 4, at 74 (69% of sellers contacted just one representative; 74% of sellers discovered their representative through either a referral or a previous relationship with the agent).
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Reppert, Public Remark 294, at 1. See likewise Tradii, Public Comment 340, at 1; Wharton, Public Comment 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 average commission has actually dropped over the last ten years from 3% to about 2.
179. Paulsen, Public Remark 364, at 1. Several panelists and commenters cited Real Patterns price quotes of commission rates. See, e. g., Kunz, Tr. at 81-82; Lewis, Tr. at 172; NAR, Public Comment 208, at 12 (remark). 180. Lord, Public Comment 254, at 1. 181. Id. at 1. 182. Dwyer, Public Remark 55, at 1.
There are a variety of alternatives available to purchasers and sellers from complete representatives to extremely restricted service representatives with a large range of fee structures."); Large, Public Comment 241, at 1 (" our average commission per transaction side has dropped 13% this year compared to last year as a result of competitors from discount rate brokerage organization 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 percentage of the home list prices that the broker keeps as a commission, and commission "fees" are the overall dollar amount paid by customers for genuine estate brokerage services.
185. Weicher, supra note 167, at 121. what is a real estate appraiser. 186. NAR a rational source of commission data, given its size and access to MLS data through its regional associations does not study or report Click for more info commission rates. A NAR financial expert discussed at the workshop that any typical commission rate reported by a prominent entity such as NAR might be used by industry 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 on commission rates out of issues that the research study results have the effect of setting a 'centerpiece' for professionals to set their commissions."). 187. Weicher, supra note 167, at 124. Weicher's calculations utilize average house list prices, not mean home 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 ending Dec. 31, 2006, offered at http://www. sec.gov/ Archives/edgar/data/ 1355001/000095012307003335/e31090e10vk. htm #tocpage. 192. A detailed evaluation of the empirical research study carried out in the real estate brokerage industry is beyond the scope of this Report.
Turnbull, Trends in Realty Research, 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 how to sell my time share & G. Stacy Sirmans, What Do We Understand About Realty 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, Costs and Pricing of Home Brokerage Providers, 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 cost of the house decreases the commission rate by about 0. 5 percentage points"). The average list prices of an existing home in 1980 was $72,800. See U.S. Department of Real Estate and Urban Advancement, U.S.
2006) [hereinafter "HUD REPORT"], offered at http://www. huduser.org/periodicals/ushmc/fall06/USHMC_Q306. pdf. At that rate, the study's statistical results forecast a corresponding commission rate of 6. 25%, resulting in a commission cost of $4,550. A home 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 (excluding 5 locations with insufficient observations for brand-new houses, in 59 percent of the staying market areas the mean commission rate paid was statistically significantly higher for existing houses than for brand-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 considerable at the one percent level for each of the formulas tested. See id. at 83. However, Weicher keeps in mind that the magnitude of the sales price impact seems small. See Weicher, supra note 167, at 121 (" Goolsby and Childs find 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. Because the authors just observed the cooperative commission derrick wesley rate, they keep in mind that their conclusion rests on the assumption that the cooperative split is a fixed share of the overall 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 research study obviously incorporates the data and appropriate findings of an earlier 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 examining how the agreement commission rate was impacted by numerous market conditions and housing variables. As the authors explain, the commission rate caught in the sample is "the contract rate and therefore does not show any modification or changes that might be renegotiated 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, supplemental information can be utilized to compute a rough approximation. Weicher, supra note 166, at 121, reports that Sirmans and Turnbull determined an average agreement commission rate of 5. 8% in Baton Rouge over the duration 1985-1987.