The authors did not determine the source of the U.S. commission data. See NAR, Public Remark 208, at 15-16; Delcoure & Miller, supra, at 15. 173. Roughly half of the public remarks submitted to the Agencies in action to their ask for public remarks were some variation of a form letter that NAR made up, posted on its website, and motivated its 1.
This letter applauded the competitive nature of the realty industry. Commenters utilizing this type highlighted local competitors between specific agents as an impressive example of strenuous competitors to which the remainder of the economy need to strive - how to become a real estate developer. In addition, they declared that the 10s of thousands of brokerages, more than 2 million licensed realty experts, and numerous business models throughout the country provide consumers with a good deal of option.
realtor.org/law_and_policy/mls/ild/regulator_letters. html) for more details on the association's instructions and suggested material. 174. NAR, Public Comment 208, at 1 (remark). 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 only one representative; 74% of sellers discovered their agent through either a referral or a prior relationship with the agent).
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Reppert, Public Comment 294, at 1. See also Tradii, Public Remark 340, at 1; Wharton, Public Comment 179, at 1. 178. See, e. g., Earman, Public Comment 73, at 1-2 (average commission is "well under 6%"); Giorgianni, Public Comment 200, at 1 (" My typical commission has dropped over the last 10 years from 3% to about 2.
179. Paulsen, Public Comment 364, at 1. A number of panelists and commenters cited Genuine Patterns estimates 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 Remark 55, at 1.
There are a variety of options offered to purchasers and sellers from complete representatives to very restricted service representatives with a wide array of cost structures."); Big, Public Remark 241, at 1 (" our average commission per deal side has dropped 13% this year compared to last year as an outcome of competitors from discount brokerage service designs 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 prices that the broker retains as a commission, and commission "costs" are the overall dollar quantity paid by customers genuine estate brokerage services.
185. Weicher, supra note 167, at 121. how to make money in real estate with no money. 186. NAR a logical source of commission information, offered its size and access to MLS information through its local associations does not study or report commission rates. A NAR economist described at the workshop that any typical commission rate reported by a prominent entity such as NAR might be utilized by industry participants as a focal point for collusion on commission rates.
at 225-26. See also NAR, Public Comment 208, at 12 (remark) (" [NAR] does not carry out research study on commission rates out of issues that the research results have the effect of setting a 'focal what happens to my timeshare when i die point' for specialists to set their commissions."). 187. Weicher, supra note 167, at 124. Weicher's calculations use average house list prices, not mean house prices.
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Id. 189. See Hearing, supra note 1, at 5 (statement of David G. Wood), readily available at http://financialservices. house.gov/ media/pdf/072506dgw. pdf. 190. Id. at 6. 191. See Realogy Corporation 10-K for fiscal year ending Dec. 31, 2006, readily available at http://www. sec.gov/ Archives/edgar/data/ 1355001/000095012307003335/e31090e10vk. htm #tocpage. 192. A comprehensive evaluation of the empirical research carried out in the realty brokerage market is beyond the scope of this Report.
Turnbull, Trends in Property Research, 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 Real Estate Brokerage?, 20 JOURNAL OF REALTY 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 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 rise in the rate of the house lowers the commission rate by about 0. 5 portion points"). The typical sales rate 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"], readily available at http://www. huduser.org/periodicals/ushmc/fall06/USHMC_Q306. pdf. At that rate, the research study's analytical results forecast a matching commission rate of 6. 25%, causing a commission charge of $4,550. A home offering for $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 5 locations with inadequate observations for new houses, in 59 percent of the remaining market areas the mean commission rate paid was statistically substantially greater for existing houses 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 significant at the one percent level for each of the equations checked. See id. at 83. Nevertheless, Weicher keeps in mind that the magnitude of Click for info the list prices effect appears to be little. See Weicher, supra note 167, at 121 (" Goolsby and Childs discover that the commission rate declines about 0.
11 portion points for each $10,000 boost in home price, e. g., from 5. 90 percent to 5. 84 or 5. 79 percent."). 208. Goolsby & Childs, supra note 205, at 85. Because 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 Rates under Competitors, 41 JOURNAL OF URBAN ECONOMICS 102 (1997 ). This study obviously integrates the data and appropriate findings of an earlier research 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 impacted by different market conditions and housing variables. As the authors describe, the commission rate caught in the sample is "the contract rate and for that reason does not reflect any change or modifications that may be renegotiated between the house seller and the representative at the time of sale." Id.
213. While it is not possible to measure the relative inflexibility based on information reported by the authors, bluegreen vacation cancellation letter supplemental details can be used to compute a rough approximation. Weicher, supra note 166, at 121, reports that Sirmans and Turnbull computed an average contract commission rate of 5. 8% in Baton Rouge over the duration 1985-1987.