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Commission Rates Fall to Record Lows

Higher sales volumes offset the squeeze.

(Boonton, NJ, April 12, 2016) — Commission rates fell in 2015 to their lowest level on record, at least by one measure.

That’s according to Real Estate Broker’s Insider’s analysis of regulatory filings by Realogy Corp., the nation’s largest broker.

At Realogy’s company-owned operations — mainly Coldwell Banker brokerages in large markets with relatively high home prices — the average commission rate was 2.46 percent in 2015. That’s down from the previous low of 2.47 percent, reached in 2007 and 2014.

Brokers are reluctant to discuss commissions for fear of running afoul of anti-trust laws, but perhaps the industry has entered an era when falling commission rates are the price to pay for a healthy real estate market. Commissions declined sharply during the housing boom of a decade ago. Realogy franchisees collected 2.65 percent per side in 2002, a number that fell to 2.47 percent in 2006.

The conventional wisdom held that commission rates dipped during the boom for a number of reasons, including rising home prices, savvier consumers, a flood of new agents competing for business, and pressure from a new breed of discounters. Commissions rose from 2007 through 2009 as prices fell and consumers recognized the value of professional marketing.

Now that the market has recovered and home values have reached new highs, commissions are falling.

Detailed analysis of the impact of rising prices and falling commission rates appears in the April issue of Real Estate Broker’s Insider.

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