Sunday Morning: A Surprise -- Realtor Commissions Are Rising in Sluggish Market

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Good morning. Add this wrinkle to last week’s debate about whether real estate agents are worth their commission: Kenneth Harney reports here that despite the sluggish housing market, ‘For the first time in years, the average commission rate on closed sales nationwide rose slightly last year.’

More from Harney: ‘According to a review of revenue and cost data from hundreds of brokerages by the industry publication Real Trends, the average commission rose by nearly one-fifth of a percentage point last year to just under 5.2%. That turnaround came despite the growing numbers of realty firms that offer discounted standard commissions or limited-service options where consumers pay lower fees but perform some of the tasks traditionally handled by full-service realty agents.’

More: ‘During the 1980s and early ‘90s, 7% was considered the standard full-service commission rate in many large metropolitan areas. During the late ‘90s and into the housing boom years, average commissions dropped steadily through the 6% level and stabilized around 5%.’

So why would commissions rise in a sluggish market? Simple: It’s harder to sell a house, so a seller will pay a little more to get one sold. Harney: ‘More realty agents are refusing listings that don’t come with full 6% commissions. A handful of high-octane agents are even charging 6.5% to 7% as their standard rates — and they are doing well.’

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Photo Credit: Reuters