The authors did not identify the source of the U.S. commission information. See NAR, Public Remark 208, at 15-16; Delcoure & Miller, supra, at 15. 173. Roughly half of the general public remarks submitted to the Agencies in response 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 applauded the competitive nature of the realty industry. Commenters using this form highlighted regional competition in between private representatives as an impressive example of rigorous competitors to which the rest of the economy ought to strive - how long does it take to get a real estate license. In addition, they claimed that the 10s of thousands of brokerages, more than two million certified genuine estate experts, and numerous organization models across the nation offer consumers with an excellent deal of option.
realtor.org/law_and_policy/mls/ild/regulator_letters. html) for more information on the association's guidelines and suggested material. 174. NAR, Public Remark 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 prior relationship with the representative).
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Reppert, Public Remark 294, at 1. See likewise Tradii, Public Remark 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 Comment 200, at 1 (" My typical commission https://diigo.com/0pm1n2 has dropped over the last 10 years from 3% to about 2.
179. Paulsen, Public Remark 364, at 1. Numerous panelists and commenters pointed out 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 (comment). 180. Lord, Public Remark 254, at 1. 181. Id. at 1. 182. Dwyer, Public Comment 55, at 1.
There are a range of choices available to purchasers and sellers from complete agents to very limited service representatives with a wide range of cost structures."); Large, Public Remark 241, at 1 (" our typical commission per deal side has dropped 13% this year compared to last year as an outcome of competitors from discount rate brokerage service models operating in our market").
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GAO REPORT, supra note 3, at 12. 184. As gone over in Chapter I of this Report, the commission "rate" is the portion of the house sales rate that the broker keeps as a commission, and commission "charges" are the total dollar quantity paid by customers for genuine estate brokerage services.
185. Weicher, supra note 167, at 121. how do real estate agents get paid. 186. NAR a sensible source of commission information, given its size and access to MLS information through its regional associations does not study or report commission rates. A NAR economic expert explained at the workshop that any typical commission rate reported by a popular entity such as NAR could be utilized by market participants as a focal point for collusion on commission rates.
at 225-26. See also NAR, Public Remark 208, at 12 (comment) (" [NAR] does not conduct research study on commission rates out of concerns that the research outcomes have the impact of setting a 'centerpiece' for practitioners to set their commissions."). 187. Weicher, supra note 167, at 124. Weicher's estimations use average house prices, not median house list prices.
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Id. 189. See Hearing, supra note 1, at 5 (testimony of David G. Wood), offered at http://financialservices. house.gov/ media/pdf/072506dgw. pdf. 190. Id. at 6. 191. See Realogy Corporation 10-K for ending Dec. 31, 2006, readily available at http://www. sec.gov/ Archives/edgar/data/ 1355001/000095012307003335/e31090e10vk. htm #tocpage. 192. A thorough review of the empirical research study carried out in the genuine estate brokerage market 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 FINANCE AND ECONOMICS 47 (2004 ); John D. Benjamin, G. Donald Jud & G. Stacy Sirmans, What Do We Understand About Property Brokerage?, 20 JOURNAL OF REAL ESTATE 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. timeshare membership at 52. 198. See Michael Carney, Expenses and Rates of House Brokerage Solutions, 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 increase in the rate of the house decreases the commission rate by about 0. 5 portion points"). The average list prices of an existing house in 1980 was $72,800. See U.S. Department of Real Estate and Urban Advancement, U.S.
2006) [hereinafter "HUD REPORT"], available at http://www. huduser.org/periodicals/ushmc/fall06/USHMC_Q306. pdf. At that price, the study's statistical results predict a matching commission rate of 6. 25%, leading to a commission cost of $4,550. A house selling for $100,000 more, or $172,000, would pay a commission rate of 5. 73%, for a commission charge of $9,901.
Carney, supra note 198, at 339 (excluding five locations with insufficient observations for brand-new houses, in 59 percent of the staying market areas the mean commission rate paid was statistically considerably greater for existing houses financial hole than for new houses). 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 list prices impact seems 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 house 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 only observed the cooperative commission rate, they note that their conclusion rests on the presumption that the cooperative split is a set share of the overall listing commission.
See id. at 81 n. 1. 209. See C.F. Sirmans & Geoffrey K. Turnbull, Brokerage Pricing under Competition, 41 JOURNAL OF URBAN ECONOMICS 102 (1997 ). This study obviously incorporates the data 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 carried out regressions examining how the contract commission rate was affected by various market conditions and housing variables. As the authors describe, the commission rate recorded in the sample is "the agreement rate and therefore does not show any modification or changes that might be renegotiated between the house seller and the agent at the time of sale." Id.
213. While it is not possible to measure the relative inflexibility based on info reported by the authors, extra information can be utilized to compute 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 period 1985-1987.