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. Approximately half of the public comments sent to the Agencies in response to their request for public comments were some variation of a kind letter that NAR composed, posted on its website, and encouraged its 1.
This letter praised the competitive nature of the realty industry. Commenters utilizing this kind highlighted regional competitors in between individual representatives as an outstanding example of strenuous competition to which the rest of the economy need to aim - how to become a real estate broker in california. In addition, they declared that the 10s of countless brokerages, more than two million certified property experts, and various organization designs across the nation provide consumers with a lot of option.
realtor.org/law_and_policy/mls/ild/regulator_letters. html) for more information on the association's instructions and suggested content. 174. NAR, Public Remark 208, at 1 (comment). 175. Id. at 2. 176. Blann, Public Comment 250, at 1. However see NAR 2006 SURVEY, supra note 4, at 74 (69% of sellers gotten in touch with only one agent; 74% of sellers discovered their representative through either a referral or a previous relationship with the agent).
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Reppert, Public Comment 294, at 1. See likewise Tradii, Public Remark 340, at 1; Wharton, Public Remark 179, at 1. 178. See, e. g., Earman, Public Remark 73, at 1-2 (average 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. Numerous panelists and commenters pointed out Real Trends 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 Comment 254, at 1. 181. Id. at 1. 182. Dwyer, Public Comment 55, at 1.
There are a range of alternatives offered to buyers and sellers from full service agents to very minimal service agents with a variety of charge structures."); Big, Public Comment 241, at 1 (" our average commission per transaction side has dropped 13% this year compared to last year as an outcome of competitors from discount rate brokerage business designs 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 portion of the home list prices that the broker retains as a commission, and commission "fees" are the total dollar quantity paid by consumers genuine estate brokerage services.
185. Weicher, supra note 167, holiday financial at 121. how to become a real estate agent in ga. 186. NAR a logical source of commission data, given its size and access to MLS information through its regional associations does not study or report commission rates. A NAR economic expert described at the workshop that any typical commission rate reported by a popular entity such as NAR might be used by market participants as a focal point for collusion on commission rates.
at 225-26. See likewise NAR, Public Remark 208, at 12 (remark) (" [NAR] does not conduct research http://manuelfdjb117.wpsuo.com/a-biased-view-of-what-is-wholesale-real-estate study 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 estimations use average home list prices, not median home sales rates.
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Id. 189. See Hearing, supra note 1, at 5 (testimony 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 study conducted in the realty brokerage market is beyond the scope of this Report.
Turnbull, Trends in Property Research Study, 1988-2001: What's Hot and What's Not, 29 JOURNAL OF REAL ESTATE FINANCING AND ECONOMICS 47 (2004 ); John D. Benjamin, G. Donald Jud & G. Stacy Sirmans, What Do We Know About Property Brokerage?, 20 JOURNAL OF REAL ESTATE 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 Services, 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 rise in the cost of the home minimizes 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 cost, the study's analytical outcomes forecast a corresponding commission rate of 6. 25%, causing a commission fee 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 (excluding five locations with insufficient observations for new homes, in 59 percent of the remaining market areas the mean commission rate paid was statistically significantly greater for existing houses than for brand-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. Nevertheless, Weicher notes that the magnitude of the list prices result seems little. See Weicher, supra note 167, at 121 (" Goolsby and Childs find that the commission rate declines about 0.
11 percentage 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 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 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 study obviously integrates the data and relevant 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 analyzing how the contract commission rate was impacted by numerous market conditions and real estate variables. As the authors describe, the commission rate caught in the sample is "the contract rate and for that reason does not show any adjustment or modifications that may be renegotiated in between the house seller and the representative at the time of sale." Id.
213. While it is not possible to quantify the relative inflexibility based upon details reported by the authors, additional info can be used to compute a rough approximation. Weicher, supra note 166, at 121, reports that Sirmans and Turnbull determined a typical agreement commission rate of 5. 8% in Baton Rouge over the period 1985-1987.