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Wednesday, October 11, 2006
Realtors overpriced by $30 billion?
Realtor commissions “may be inflated by more than $30 billion annually,” says a new study.
The report by Mark S. Nadel of the AEI-Brookings Joint Center for Regulatory Studies says agents charge too much. He calls commissions based on a home’s sales price “an anomaly” akin to a CPA basing his fee on his client’s gross income.
“Real estate broker commissions are strangely unrelated to either the quantity or quality of the service rendered or even to the value provided,” Nadel writes.
Nadel urges “fee-for-service” pricing that would combine “flat fees, hourly fees, and bonuses, including percentages of extra value created.”
Realtors counter that they get paid only when a sale closes. The report is just the latest to pile on Realtors for charging too much — at a time when many agents are struggling to make a living.
The AEI-Brookings Joint Center is an offshoot of the conservative American Enterprise Institute and the liberal Brookings Institution.
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