The authors did not identify the source of the U.S. commission data. See NAR, Public Comment 208, at 15-16; Delcoure & Miller, supra, at 15. 173. Approximately half of the general public remarks submitted to the Agencies in action to their demand for public remarks were some variation of a form letter that NAR composed, attorney for timeshare cancellation posted on its site, and motivated its 1.
This letter applauded the competitive nature of the real estate market. Commenters utilizing this form highlighted local competition in between specific agents as an exceptional example of strenuous competitors to which the rest of the economy ought to aim - how much does real estate agents make. In addition, they claimed that the tens of countless brokerages, more than two million certified realty specialists, and numerous service models across the country provide customers with a terrific deal of choice.
realtor.org/law_and_policy/mls/ild/regulator_letters. html) for more information on the association's guidelines and recommended material. 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 contacted just one representative; 74% of sellers found their representative through either a referral or a previous relationship with the agent).
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Reppert, Public Remark 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 ten years from 3% to about 2.
179. Paulsen, Public Remark 364, at 1. A number of panelists and commenters mentioned Genuine Patterns price 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 Remark 55, at 1.
There are a variety of options available to buyers and sellers from full service agents to really limited service agents with a wide range of cost structures."); Large, Public Comment 241, at 1 (" our average commission per transaction side has dropped 13% this year compared to last year as an outcome of competition from discount rate brokerage organization models running in our market").
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GAO REPORT, supra note 3, at 12. 184. As discussed in Chapter I of this Report, the commission "rate" is the portion of the house prices that the broker keeps as a commission, and commission "costs" are the overall dollar quantity paid by consumers for genuine estate brokerage services.
185. Weicher, supra note 167, at 121. how do real estate agents get paid. 186. NAR a sensible source of commission data, offered its size and access to MLS information through its regional associations does not study or report commission rates. A NAR economist explained at the workshop that any typical commission rate reported by a popular entity such as NAR might be utilized by market individuals as a centerpiece for collusion on commission rates.
at 225-26. See also NAR, Public Remark 208, at 12 (remark) (" [NAR] does not perform research on commission rates out of issues that the research study results have the result of setting a 'focal point' for practitioners to set their commissions."). 187. Weicher, supra note 167, at 124. Weicher's calculations utilize typical house list prices, not typical house prices.
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Id. 189. See Hearing, supra note 1, at 5 (statement of David https://fortunetelleroracle.com/startups/how-is-the-real-estate-market-questions-626599 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. A detailed evaluation of the empirical research study performed 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 PROPERTY FINANCE AND ECONOMICS 47 (2004 ); John D. Benjamin, G. Donald Jud & G. Stacy Sirmans, What Do We Know About Realty Brokerage?, 20 JOURNAL OF REALTY RESEARCH 5 (2000 ). 193. 1983 FTC STAFF 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 Rates of Home Brokerage Providers, 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 cost of the house reduces the commission rate by about 0. 5 portion points"). The typical sales price of an existing house timeshare maintenance fee elimination in 1980 was $72,800. See U.S. Department of Housing and Urban Development, U.S.
2006) [hereinafter "HUD REPORT"], readily available at http://www. huduser.org/periodicals/ushmc/fall06/USHMC_Q306. pdf. At that cost, the research study's statistical results anticipate a corresponding commission rate of 6. 25%, resulting in a commission charge 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 areas with insufficient observations for brand-new homes, in 59 percent of the staying market locations 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 considerable at the one percent level for each of the formulas tested. See id. at 83. However, Weicher notes that the magnitude of the list prices result appears to be small. See Weicher, supra note 167, at 121 (" Goolsby and Childs find that the commission rate decreases about 0.
11 portion points for each $10,000 increase in home price, e. g., from 5. 90 percent to 5. 84 or 5. 79 percent."). 208. Goolsby & Childs, supra note 205, at 85. Given that the authors only observed the cooperative commission rate, they note that their conclusion rests on the assumption that the cooperative split is a fixed share of the total listing commission.
See id. at 81 n. 1. 209. See C.F. Sirmans & Geoffrey K. Turnbull, Brokerage Pricing under Competition, 41 JOURNAL OF URBAN ECONOMICS 102 (1997 ). This research study obviously includes the data and relevant findings of an earlier study conducted 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 performed regressions evaluating how the contract commission rate was impacted by numerous market conditions and real estate variables. As the authors describe, the commission rate recorded in the sample is "the agreement rate and therefore does not show any change or changes that may be renegotiated between your house seller and the agent at the time of sale." Id.
213. While it is not possible to quantify the relative inflexibility based upon info reported by the authors, extra information 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 period 1985-1987.