You may have heard that the “standard” commission is 6%, split between the listing agent to sell house and hold open house and the real estate agent who represents the buyer. A portion of the agents’ splits then goes to the brokerage under whose banner they work.
But 6% isn’t the real number. The average commission rate nationwide on home sale transactions hasn’t been 6% since 1992, when it was 6.04%, according to Real Trends, an industry publishing and consulting firm that obtains confidential transaction data from brokerages annually. In 2005, at the height of the housing bubble, it was 5.02% and in 2013 it was 5.38%.
Why bring this up? A controversy over disclosure of commission rates in listing contracts erupted in Denver last month, shedding fresh light on what can be a contentious subject, shrouded from public view.
Though sellers may pay the commission to both the listing and selling agents, the buyer’s dollars typically fund the transaction. Buyers should know in advance how much their agent stands to make and be able to negotiate that amount lower than what is offered in the listing contract, Hunt said. After being threatened by the local MLS with severe penalties, Hunt pulled down the commission data from his website.