Real Estate Commission Report – 2020 National Average
Real estate commission data is hard to come by. One of my goals as a real estate agent in Portland is to educate the public and provide transparency within the real estate industry on a number of topics – including commissions. Most of the information you can find online is dated or summary in nature, many without proper references.
Realogy Brokerage Group has, “As of December 31, 2019, approximately 710 company owned brokerage offices and approximately 52,200 independent sales agents working with these company owned offices.” They report that their average commission per side was 2.41%, which would equal a 4.82% commission rate for the seller (since the seller typically pays both sides of the commission and the buyer does not pay commission). This is not perfect real estate commission sales data as Realogy is including commission from home rentals (different rates, often lower than 5%) in the above total figures.
Our company owned real estate brokerage business derives revenue primarily from gross commission income received serving as the broker at the closing of real estate transactions. For the year ended December 31, 2019, our average homesale broker commission rate was 2.41% which represents the average commission rate earned on either the “buy” side or the “sell” side of a homesale transaction. Gross commission income is also earned on non-sale transactions such as home rentals.The above information (two quotes) is coming from Realogy Holdings Corp. FORM 10-K for the fiscal year ending Dec. 31st, 2019.
Real Trends in the meanwhile is one of the only research firms in the country reporting on national real estate commission rates, and it is hit or miss to find their yearly report.
Real Estate Commissions Haven’t Changed Much in the Last 14 Years
With an average real estate commission rate of 5.02 in 2005 and 4.96 in 2019, there is almost no movement. It is really hard to suggest a trend with such a small difference over the last 14 years of reporting (a mere .06% difference).
6% Commissions are Unusual
While commission rates haven’t changed much in the last 14 years, they have changed a lot since the 1990’s. 6% is not in the cards for most real estate agents, 5% is the new average commission rate.
4.5% is our Max. Commission Charge
We believe real estate commission should be reasonable. Not only do we charge a max. of 4.5% commission, but we have a cancel anytime policy for no charge, never charge fees, and we pay extra to feature our listings on multiple MLS platforms, and we pay extra to feature our homes on Zillow, Realtor.com and other major public portals. At the end of the day, our client’s homes sell faster and for more on average. See everything our sellers agents offer our clients here.
What determines real estate commission rates?
Like any other market, supply vs. demand determines price. The more real estate agents there are in the U.S. the more downward force there is on real estate commissions. Right now there are a record number of real estate agents and that is keeping a constant downward force on commissions. If the number of agents go down significantly there could be an upward push on commissions.
Also, of course, there are more ways to sell a home than ever before and that will keep a downward force on commissions as well – creating competition for traditional agents. That industry section (think Ibuyers, such as Zillow buying your home) is still small, but it continues to grow at a slow pace. Alternative methods of selling your home are still often charging higher fees than 6% to get the job done and offering lower final home sale price tags – all for the sake of convenience. Right now it is simply too high a cost for extra convenience, but if those alternative methods are able to figure out lower cost methods (it is not certain), then they may pose more of a challenge. Personally, I think an internet savvy, tech-forward real estate agent is the front runner for efficiency and cost effectiveness in a home sale in today’s market.July 17, 2020