Government to Realtors: You charge too much for commissions

At the risk of piling on a real estate industry already taking its licks, here's the latest from the U.S. Department of Justice in its campaign against real estate commissions it deems anti-competitive.

The feds have set up a Web site for consumers to track real estate law in their respective states. The gist of the government's argument is consumers were ill served paying about $93-billion in brokerage commissions in 2006.

The average commission this year stands between 5 percent and 5.5 percent, the government says. In real money, a typical commission this year was $11,203, up about 23 percent since 1998.

Let the DOJ speak for itself: “The actual median commission paid by consumers rose sharply along with the run-up in home prices. Unless broker costs were also rising sharply during this period of time, competition among brokers should have held commissions in check even as home prices were rising.”

DOJ filed an anti-trust lawsuit against the National Association of Realtors in late 2005. The case is still inching its way through the courts.

For what it's worth, when I sold my house north of Tampa this year I volunteered to pay 6.5 percent, the extra 0.5 percent thrown in to entice the buyer's agent.

The tactic worked. I was one of the only sellers in my neighborhood offering so much and got more traffic as a result. I paid $1,000 more at closing but it was worth it for the quick sale.

 

Comments

[Richard Mucciolo]

Typical of the US Government to know more about what they know nothing about than those actually involved...Realtors often work with many clients, never selling anything but using up their valuable time...the price of gas has gone up tremendously as we all know...and Realtors earn their living using gas. Commissions are based on what Realtors do besides just selling the home and making the commission....the list is much too long to place it here...but anyone interested can contact any working Realtor for the answers, not the Department of Justice...that sits in spacious paid for by the people offices and decides Realtors make too much...how about Senators? Congressmen? and all the people they employ?

[Jeff]

Realtors are the next travel agents... most of us won't need them soon. If you can use a computer you can probably sell your house. All you need is to find someone to handle some of the paperwork and that's about all you need.

[Frank Kregler]

The DOJ has some nerve attacking an industry that is already well regulated from within and externally. How about the American tax paying public being ill served by a bloated, inefficient government that wastes money on a scale that cannot be measured. Get on any interstate highway and you'ff feel your government at work with the shape of the roadways. Stay the hell out of peoples business and try to pay less than $350.00 for a hammer. Waste: the government wrote the book on it and there's a new addition every year.

Jeff, it is one thing to arrive at a hotel and the desk clerk not being able to find the reservation you made on the internet---it is another thing to arrive at a real estate closing table without a Realtor and have your house deal blow-up. Do yourself a favor and get a Realtor to help you.

[Tony]

Realtors are for suckers. We had a realtor suggest listing our home for 199K (12k commission 187k net), we went with Buy It Now and paid $1200 sold it for 212k, Net 210k a savings of 23k. realtors know very little. They are trained less than a hairdresser and just more than a used car dealer. Time has come for flat rate or just pay to get it on MLS. Buyers know they are paying extra for a realtor. Just hire a realestate attn for the closing. Realtors don't know more than you.

Real estate fees that Realtors negotiate with their customers is none of the Federal governments business. The feds need only be involved if there is collusion among Realtors at setting fees.

The Dept. of Justice could do Floridians a better service by getting all over property insurance companies that are clearly colluding on insurance premiums in Florida. Don't give me the old story about insurance being regulated by the states and not the feds. A wrong is a wrong and insurance companies are colluding to screw Floridians in a wholesale frightening manner.

[TJ]

Florida has 12 billion realtors and most don't have a clue of how to sell a house, they just took the class and got the license. For the work involved a realtor should be paid around $2500 regardless of the value of the house.

Why doesn't the Dept. of Justice jump on attorneys that charge 33 1/3% & 40% fees for settlements and awards.

Those attorney fees are a lot more than 4-7% commissions that real estate agents typically might charge.

Don't think all attorneys are mistake proof and better able to put real estate deals together either.

[Seller]

Whats funny is the all the people who disagree with this article are the Agents. The real truth is that most people with a little work can not only find,list and finance their own home. From what i have seen working on the lending side, there are normally a handful of agents that do 80% of the business in an area. The rest is done by the other thousand or so agents. This means they have to charge more because they are doing less per month. So the big dogs can charge just as much. I dont disagree with what they charge, i disagree with people thinking they have to use a agent or they are saving money by using one.

[Larry]

As always happens, once greed gets rolling it is hard to stop. But it will when the realtors go the way of the airline ticket counter employee and the nearly extinct travel agents. They better make all they can now, because their's will be the next job outsourced to the consumer and the lawyers. The lingering effects of the damage done to this market segment is just now being realized and will be felt for many years.

[Stephen]

Yep the whole thing is a joke, and as previously stated, Real Estate Agents are for suckers. I recently sold a house using a disount flat fee listing ($300). The selling agent still got the usual 3%. I don't mind that as she really worked it and its well earned. But to pay an extra 3% for the listing agent to type it into MLS? I'll pass. And after selling 6 houses in 15 years I realize most agents know less than me.

In response to the post above that says Realtors are for suckers. First of all Realtors give price opinions. Noone can dictate what a house will sell for until it sells. An experienced agent will price a home on comparables, with adjustments. The way the post reads you interviewed one agent. Probably a very green agent. Secondly, with the exception of a few cases, most seller's make more money selling through Realtors - search it on google. There have been numerous non-bias studies. Next, there ARE flat rate brokerages. Do more homework next time and you will find them. Your contradicting yourself when you say just pay a fee for it to go on MLS. Why would you want it on MLS if you don't want to deal with a Realtor. MLS is the Realtor's multiple listing service - for REALTORS.

I'm not saying a consumer can't successfully sell there home - they can. But they need an attorney every step of the way (not just for closing!) Laws are made everyday requiring dislosures (lead based paint, radon gas, HOA, etc, etc, etc). I'd hate for a consumer to overlook one of these disclosures required by law, and be sued. And, yes, it happens everyday.

The most recent post saying how many Realtors there are in Florida. A Realtor is an member of the Association of Realtors. A real estate licensee is just that - not a Realtor unless they are a dues paying member to the Association of Realtors, and adhere by a code of ethics. There are many doctors, lawyers, auctioneers, etc, that are licensed, but inactive. It is the same way with real estate licensees. Experience is everything. Go with an inexperienced hairdresser, auctioneer, attorney, etc, and you will be disappointed most of the time. Likewise with real estate agents.

Realtors work on commission. Commissions are not set by law, or standard, as it would be illegal. We live in a free enterprise system. Negotiate your commission. If you don't want to pay that much, DON'T.

I'm sure this post comes off as me being a Realtor. I am. However, I have not received a commission in many years. I don't broker properties. I develop properties. I have a brokerage firm set up, but I don't list even my own property. I choose an outside firm, with a very experienced agent to market, and sell my properties. I don't have the time to deal with disclosures, etc, and know my Realtor is legally responsible. It isn't worth my hassle.

In conclusion, would you pay an attorney $1,500 an hour, a hairdresser $600 a cut, or an auctioneer 30%? No. If a Realtor is charging you too much, find another one. Just remember though, would you pay that same attorney $25 an hour, a hairdresser $2 a cut, or an auctioneer .5%? Probably not, you get what you pay for.

[Mel Parker]

The government should mind their own buesiness. They can't seem to manage anything very well, let alone the real estate business.

[hoshi]

I agree that realtors make way to much money for the sale of a house but I really think it is comical that the bloated government would point this out. I agree with many of you (I can tell that many of the reponses are from realtors) that the government who can't handle our money and could care less about the American public has no right to criticise any person in the US as they do nothing for us. When the government actually puts the American public first I will begin to listen but until then you all are a bunch of morons who teach Americans how to blame others and trust no one.

[Tony Gallo]

Wow you realtors are comming out of the walls like cochroaches defending your high/ripoff commisions. It is amazing how you write 6 paragraphs and don't have the guts to put your name to it. So anyone who passes the test and pays a fee can be a realtor, that says a lot about your organization. It is funny how the Pinellas realtors assoc. just paid all this money for a big fancy new building and now they can't even afford to keep it open.
Maybe they should have paid more attention to what was going on than blindly robbing people and not planning for the future. realestate agents are no better than whores, maybe worse.

[Paul Sliwa]

When is the last time you negotiated a large contract? When is the last time you sold a house? Most likely not many times at all. Realtors, a good one that is, do this all the time and know the 'ins and outs' of what is realistic and what is illegal. I say if you don't want a Realtor, it is completely your choice not to use one. It is not required by law, and you are completely allowed to sell a house on your own. So, where is the issue at hand and why is the DOJ involved at all? This semms all voluntary to me. If people are so confident in selling a home on their own, they aren't comfortable with perhaps negotiating a commission if they choose to use a Realtor? By the way, I am not a Realtor, and I own 4 buildings... all bought using a Realtor and I was more than happy with their performance and cost.

[Jeremy]

The realtors are angry that they were called greedy, what a shocker.

[Helen]

I wonder how long the court system would be clogged with lawsuits from ordinary citizens buying and selling a home without a Realtor? A good Realtor knows more than you think they do.

i agree we make entirely too much. in all honesty we make more than alot of doctors and lawyers.

[Floyd]

As a mortgage broker in the business for the last 8yrs I have to agree that a high percentage of Realtors have no clue what they are doing. The same can be said about my profession as well & although it's tough right now I'm glad to see the riff raff getting out of the industry. I find it funny when a Realtor questions me because I'm making a point or point & a half on a loan & they are making 6% between the two of them. I generally make their job easier. Some of the things that Real Estate companies offer to validate thier commissions are just smoke & mirrors. I mean really, do you need a video of your home for people to see?? I know a few Realtors that spend a good amount of money in advertising for the homes they list & maybe in that situation I could see paying the extra commission to the listing agent but if your not a listing agent then the commision is to high. As has been mentioned, if you have the time & a good real estate lawyer or friend that is a realtor & willing to do the contract for you for a nominal fee, then no need to pay 6%. Like in the mortgage business, just because you take a class & pass a test does not make you a mortgage broker or realtor. Experience & the desire to really hone your craft can get you there if your willing to put in the time. It's not like winning the lottery & instant financial success is just around the corner. It takes time to build your knowledge base, your credibility, & your clientele. The car salesman mentality has to go!!!

[Sue]

I flipped two houses two years ago and didn't use an agent. Buyer and Seller were very happy. I would definately do it this way again - get a good title company. That's all you need.

[Tony Gallo]

Why won't they use their name when they comment? Like thieves in the night.
agent: nice house, good deal blah blah blah

me: offer them 400K
Agent: they are asking 425k and a lot of people are looking
Me: 400k
agent: Ok - they said no/or they said yes.
Tough work....
We all know they are in colusion to keep commissions high, they as agroup do not want to work with lower fee brokers and that is what the goverment is looking into. If an agent says, she will not sell a house or show one that has a low commission that is fine, but when the band together as an association and do it,there is anti trust and fair market issues, just like if the airlines got together to set prices on flights. If one airline raises/lowers prices and others follow that is legal, if they discuss it first and make a deal to follow that is illegal. Again why are you agents scared to use your names? I use my name, I stand behind what I say.

[Trish Sublette, mydirectmortgage.net]

Those of you who say you do not need a realtor or anyone can sell their own house or realtors don't know anymore than the average person or that they charge too much are ignorant of all that a realtor does. Sure there are some out there that don't do the job they promise and just show up at closing for the check. But, the majority of realtors are hard working people, just like the rest of us. As for education, did you critical people know that realtors have to do continuing education. Did you know that many times, if it wasn't for the realtor, the deal would not go through at all. The realtor coordinates with the buyer or seller or both and the lender and the title company. When an issue arises, they talk the buyer or seller into being patient. Do you also know how many man hours are spent by a realtor in advertising, showing homes, negotiating prices, doing vast amounts of paperwork, etc. etc. many times without payment of any sort. How would you like to work hours and odd hours at that and not receive any compensation? How would you like the realtors to band together and tell you that you are not worth what you are getting paid? Yet, people like you cry on the realtor's shoulder, sucking their blood dry, for situations that they got themselves into; and expect to realtor to run to their aid without any payment. From one closing commission, a realtor has to not only pay their own bills, but has to use that money to market someone else's house and chaufer prospective buyers. I am not a realtor, but I work with realtors. I've helped people that are trying to sell their house on their own. I've seen the mess they have made in the contract and I have had to speak with both buyer and seller. It is not a piece of cake. It is time consuming and frankly, a waste of my time, when I am trying to help someone secure the financing for the home purchase. Anyone that questions what I earn, does not have a clue what I do. The same goes for the realtor. And for the US Justice Dept to attack the commission paid to the realtors is a wast of the government's time. What kind of justice is it if we question someone's worth?

What the DOJ is ultimately reacting to is the adverse effect of the traditional real estate industry's use of a highly "disproportionate" percentage based commission system.

The DOJ sees the results of the percentage based commission system as indefensible - and it is.

The DOJ asks a legitimate question, "why did real estate consumers find themselves paying disproportionately larger real estate commissions during an appreciating real estate market - when there was no corresponding increase in the REALTORS cost of doing business?

For that matter, why are any real estate consumers asked to pay larger real estate commissions simply because they are selling higher priced homes?

In other words, what entitles the real estate broker to a percentage of a Sellers asset?

NAR finds themselves in the awkward position of defending the indefensible.

Consumers, represented by the DOJ, are voicing their objections.

The alternative is a fee-for-service model. A model that establishes a value for professional real estate services. Same service. Same fee.

What would the DOJ's position be "if" the percentage based commission model had been replaced by a fee-for-service model?

The answer is - they would have no case.

Therefore, I maintain that the traditional percentage based commission model is the root cause of NAR's problems - and consumer's complaints.

I own a real estate company, www.flatfee.com, that represents what an alternative full service real estate business model looks like.

I strongly believe that a professional REALTOR should be involved in each & every real estate transaction. Real estate, mortgage, and title insurance represent complex business transactions that are best left to industry professionals.

If priced fairly - real estate consumers will be happy to engage the services of a professional REALTOR.

Choice is good.

Poor Neo-Con wannabes. You donate to their campaigns, but now now the real Neo-Cons think you should give up your commissions in order to allow them to jump start the real estate market. When will you learn that in the feeding frenzy that is the GOP operation, only the very very wealthy will benefit in the end.

The state of Florida charges a percentage fee on every real estate sale in Florida--Documentary Stamp Tax.

If it is okay for the state to charge a percentage fee, it should certainly be okay for Realtors to charge a percentage fee negotiated between Realtor and customer.

Flatfee guy...If all real estate brokers agreed to charge fees the same as you do, it would be illegal collusion.

the day for realtors is gone the bums are worthless.

[Tony Gallo]

Trish - I real estate attn charges a whole lot less to do the paper work and I am not having to help pay for his next client. So a realestate agent charges me more to fund her next deal, is that what you are saying? Also commision prevents a realtor from wanting to get you the best price. every 10k the seller drops the price realtors lose $600. If realtors moved to the flatfee concept because that's where the market was going, or what people wanted it would not be illegal. Why are you all spouting crap, but don't have the guts to sugn your names? Are you ashamed of your name, or your integrety?

[Tony Gallo]

Sorry for my spelling.

[me]

Don't forget the majority of the feds are LAWYERS....Does anyone see an ulterior motive here?

Let's take the bread out of the realtors' mouths and put it in the "ethical" lawyers' mouths instead.
Yeah right!

Stats show the trust in lawyers, aka politicians, is right up there with used car salesmen.

So let's see the options..... should I do the paperwork myself and be honest enough to disclose HOA fees, HOA docs, roofleaks,termites,sinkholes...etc.and if I don't disclose, then I am legally liable....so again I would have to hire an ATTORNEY to get me out of the lawsuit the buyer would file against me.

Or do I hire a realtor with experience who can wade through the mounds of paperwork that an attorney would charge me mega bucks for? Of course that would depend on the CHANCE that I could even find a lawyer ethical enough to really perform the due diligence I am hiring them for then I would hire one.

NO I am not a realtor, and yes I had used an online listing service without any success, and yes I did use a realtor who sold my house for the price I wanted to sell it for, and yes she sold it within 30 days. I would use a realtor again, and I would negotiate the commission just as I had done before...those who are legit will do it for a "fair" amount.

No one, works for free, not even LAWYERS AKA POLITICIANS!

So JOE Q. PUBLIC, don't be fooled by those sitting in D.C. because they are the biggest liars of all.

Flatfee lists 1000 homes at $95/month for six months--none of houses sell--Flatfee collects $570,000 for no results.

Traditional broker lists 1000 homes at 6%--none of houses sell--broker collects $0 for no results.

Flatfee has no incentive to sell house per their model. They get paid whether it sells or not.

why shoud you get a gazillion dollars to do nothing? Now you're all sitting at home sweating buckets, cause the jig is pretty much up!! I hope you saved for a rainy day ...'cause it's raining!!

First, I am amazed at how many of these posts contain incorrect grammar usage, as well as misspelled words.

Second, good Realtors earn their commissions. Their job involves much more than the general public thinks it does.

My biggest complaint about Realtors and other real estate agents is that they typically did not disclose to potential purchasers the fact that the real estate taxes on a homesteaded property would in all likelihood increase after a sale. So a lot of purchasers were not prepared.

[JAMES]

I sold my house without a realtor and saved $47,000.00 by not paying commisions. It sold in one day and sold for $50,000.00 more than a "realtor" suggested I list it for. It only cost me around $300.00 to get it on the MLS

I am amazed at how many of these posts contain correctly spelled words but lack punctuation and correct sentence structure.

1:01...this is a blog, not a grammar class in school.

James, you were talking to the wrong Realtor. Are you sure you got all you could for your old house? If you sold it in one day only, you probably shot yourself in the foot big time!

[Chris Samprey]

I don't need a realtor to help me with contacts. all you have to do is make 10 mintes available in your day to do what a realtor doos.

I am selling my current houme on my own and just watch how much money I save by not paying commision. I am alot smarter than a realtor, and also am alot better at the paperwerk.

Chris, hope you're "alot" better at writing a contract on paper than doing "paperwerk" on computer. Good luck selling your "houme"--you're going to need it.

[James Thorner (Blog author)]

Since I started this blog post rolling I wanted to say I tried to sell my house for 6 months without success, including "By Owner," and only coughed up a 6.5 percent commission reluctantly. Two mortgages gets old fast. Unfortunately I lived in a Tampa suburb with a large glut of unsold builder homes and had to price my older house accordingly.

James Thorner...The real estate market is not always fair-but it is always accurate.

The Wachovia Economics Group report that was described yesterday in the SPT's should be required reading for any current home seller.

Unfortunately, many current sellers that purchased in 2004, 2005, 2006 are going to get killed when they sell and have to bring money to table to close. It's brutal, but that is life.

[Sandra]

As a Realtor, I admit we make too much per sale and perhaps we should go towards a fee based system.

So, no longer should Realtors give free appraisals, free consultations, free driving around and touring of areas that are unfamiliar to out-of-towners, free mortgage and property tax advice, free property swap advice, free investment return advice. Even access to Realtor.com, yahoo.com, ect. which are all supported and owned by Realtors, should require a fee. Afterall, we Realtors maintain and upload the information so you can peruse properties at your leisure. When we give advice on how to get discounted title insurance, there is a way, we should charge for that as well.

When we fight with lenders for short sales on behalf of inexperienced clients, we should charge for the hours of being on hold. If we host a brokers' open, we should get paid. It's our time. If we host an open house, certainly that's worth something.

When we fight for our clients' deposits after a deal gone wrong, we should charge for that, instead of doing it to be honorable.

Everytime your house appears in home magazines and newspapers, you, the customer, should share the burden.

Insurance advice and how to get discounts should have a fee attached. (I just saved a client $2000 as he didn't know the right things to claim.)

I'm with you. Enough waiting around for a house to sell to get paid. Let's lower the commission and charge set fees along the way!

Somehow, people would be boo-hooing over that too.

[Jason Rivera]

I've sold my first home with a Realtor (she was an old lady who was really crazy).

I sold that home myself, but listing it in the MLS, to an agent.

I bought my next home with an agent.

I became a Realtor myself.

There are a few trains of thought going on in this page:

1) Realtors are scums (from anti-realtors)

2) Realtors are great (from Realtors)

I will admit there are overpriced agents, just like I will wager there are folks overpriced in the anti-Realtor's career field. We all see overpriced mechanics, overpriced home repairmen, overpriced lawyers, overpriced doctors, etc.

That is nothing new. For those that aren't using an agent, good for you. For all of you saying you sold your house a few years ago for $X more, was that in the heyday of the market? I'd be curious to know if it was, as everyone sold for more.

I personally charge on the situation. If you are buying a house with me, I'll list your house less, as the 2 "sides" compensate for each other. I've listed as low as 3% total (usually 1% for me in that).

For those that think there is nothing to it, its true if the agent doesn't do jack. However its not uncommon to pay over $1000 minimum in various fees needed to STAY a Realtor a year (finding a home on Realtor.com actually costs money for the agent, its not free for the agent). Not to mention taxes that the government will charge and other various insurance and fees that a salaried person gets taken out of their paycheck automatically while we don't.

You may say so what, another point we are greedy. What about your mechanic staying licensed and with the shop overhead? Why will one shop charge $80 labor per hour and another $60, or even 2 different pricing for parts that are the same. Shouldn't it be the same? Better yet, the lawyer who will handle your home sale? He's charging you for his fees too. I can walk into one supermarket and pay $X for milk and pay $Y at another place. Same milk brand, so why is there a difference? Its the nature of business. No two people do the same thing.

The best example I can make is this. Say I get a $5000 commission check. Wow that's high some may say. I'm ignoring the fact you may think I do nothing, or how much work I actually spent. Since the broker actually is who I work under, all the brokerages take their cut (some a flat fee per transaction, some a % up to 50%). I worked for a big named company before, that trimmed 10% for the national group and its marketing. Then the broker got their cut for office expenses, then me. So that $5000 could be as low as $2500 for me after all that is done. Now I HAVE to budget for taxes as the IRS will charge me like they charge you in your paycheck. Based on experience, I'm charged about 25% to the IRS yearly. So now I'm at $1875. Take away expenses I incurred, tithing since I do that to our church, or other fees your paycheck includes like medical, etc, and I'm down way below that. Some times I get more, sometimes I get less.

Thave been times that I've steered a client from a bad decision where it would have costed them $$$$. Could that person have done dilligence and saved himself that money? Sure, I'm not the the greatest thing since sliced bread, but he didn't. I think in that case I saved him more than I earned (he was a buyer BTW). I also could have saved some friends in a new construction deal twice as much as what the builder was giving as commission. I know this for a fact as one of the sales reps who I had done alot of business with told me, after I found out they went to her partner. I was told they could have gotten $10,000 more off if they were with me. I tried to tell the friends to let me know if they go prior so I could help them, but they didn't anyways.

So the moral is, anyone can sell a house or buy a house. You can market it yourself, put a flat fee MLS listing, etc. You may sell it quick, great, you may sell it a year from now.

For some people, they can do their own car repairs, for other they won't and have someone do it for them.
For some people they will sell on their own, for some they won't and they get a Realtor. If you can, all the power to you.

And also, ALL commission is negotiable!!! I've seen commission all over the board, from me offering 3% up to 8% and more.

DOJ, or no DOJ, it should be clear that real estate consumers are struggling to appreciate the value of the traditional REALTOR brand. This is unfortunate.

Today's real estate consumers want access to information; in fact, they demand it. They are smart, informed, and web savvy. They actively question the value of all goods & services being rendered - including the services of REALTORS.

So when consumers, and the DOJ, begin to increasingly question the value, or the effects of the percentage based REALTOR solution - real estate professionals can either make the decision to adjust their business models to more closely reflect their "paying" customer's sense of value - or they can decide to dig their heels and stubbornly continue to defend the indefensible - and risk further alienating consumers.

Will it be evolution or extinction?

[Nee]

Why is the Fed taking medicine for the seller's cold. In most instances the seller pays the realtor commission and the last time I checked I did not see any seller complaining. WHAT THE FED SHOULD BE DOING IS MONITORING THAT FORECLOSURE MESS AND ALL THESE FOLKS THAT ARE BEING MADE HOMELESS THROUGH THE RUTHLESS AND MAYBE CRIMINAL ACTIONS OF SOME MORTGAGE BROKERS. THEY NEED TO SET UP A HOTLINE FOR FOLKS TO CALL BECAUSE MANY OF THEM ARE STUCK. As a realtor I work with folks who can't get a rental because they are losing their homes and their credit is awfully bad. In one case the client got sick and had to be hospitalized. They had to pick between the accumulated co-payment and the house note. The folks who should be helping the client secure their disability funds are dragging their feet and so the people are losing their home. Hard working, honest people... This is just the Fed trying to cause a distraction from the current mess... We need to pray...

[Dave]

Realtor bashing 101. I feel for them, however they were so smug when things were going well. Suck it up, things have changed and you need to have a reality check. Lower prices will sell.

[George]

flat fee vs commission, does it take twice as much work to sell a house for $250,000 than for $500,000? $1,000,000 vs $2,000,000? why pay twice as much? does agent work twice as hard? I agree agents should charge for the now free services and advice given, those who need it can pay for it and those who don't need help- don't buy it. The government is looking for price fixing in setting commissions- it is hard to justify the increased money made (higher commissions due to increased sales prices) with no increase in services.

The market can still pay for better service by rewarding the agents that actually SELL the property, the agents that convince the buyer to buy, that justify the price to the buyer, that sort through the now overwehlming data, that give the nudge at decision time, that overcome the decision remorse, be their advocate in the contract/closing. The good agents justify their fees by their success not just being the gatekeeper to the multiple listing system.

The good agents that can justify the commission charged will be paid more that the "order takers" but now the government says the consumer must be given a choice of how much to pay (this is nothing new and realtors are always being scrutinized for restraint of trade issues- that is why the MLS is now open to non-realtors).

[Fuzzy Bear]

The DOJ has some nerve attacking an industry that is already well regulated from within and externally.

Frank:

Your point on government waste is correct.

However, your mention that the RE is well regulated from within and externally is not correct and you know it! Law enforcement agencies do not waste their time and the tax payers money unless their is a legitimate concern/compliant. I know that for a fact! The argument made for expenses such as gas, etc. is not a valid argument versus the commisions realtors receive from the consumer. Simple math clearly demonstrates that expenses are very little vs the high commissions received on a home sale.

Commission based industries such as car sales have proved time and again to breed fraud and corruption. The realtors commision is no exception. In fact, the majority of the licensed realtors in the state of Florida do not have an education level higher than 12th grade.

I find it very interesting that the negative comments were posted by the realtors on this site. However, the realtors in the bashing of the other bloggers on this article may have made a bad situation worse.

We are your customers and you, the realtors are not listening to your customers. The consumer is going to cut their costs one way or the other just like in the travel industry and car sales. By creating anger and frustration with your potential customer base is only going to speed up the demise of the realtor!

If you don't listen to the consumer, which is your customer base, you will be out of business in the near future! I for one will never use a realtor again to sell my home. In fact, I have already sold and bought property without the use of a realtors service and saved thousands of dollars by cutting out the commission based realtor.

[tommyduncn]

Excuse my lack of knowledge, but I thought that buyers' agents are supposed to show all houses equally, regardless of any difference in commission. Isn't it illegal to give preference to homes that offer a higher commission?