Florida real estate commissions are steadily falling; and the oft-cited, oft-debated industry standard of 6 percent is becoming a distant memory, according to little-noticed numbers the nation’s largest real estate broker released this month.

Realogy Corp.’s annual report shows that the average ”commission side” - the amount paid to either the seller’s or buyer’s agent - dipped below 2.5 percent in 2006.

Assuming that agents for both sides equally split commissions, that means the average commission was less than 5 percent.

”That’s good news,” said Stephen Brobeck, head of the Consumer Federation of America, a group that has criticized real estate commissions. “It shows consumers are increasingly negotiating.”

Don’t feel too bad for Realogy and its thousands of agents. Thanks to soaring Florida home prices, their take from real estate transactions has risen. Even as Realogy’s commission rates fell over the past five years, the average dollar amount per commission side rose to $12,691 in 2006 from $8,535 in 2002.

The stakes are high, both for the nation’s million-plus Realtors and for Florida mortgage borrowers, who pay an estimated $60 billion-plus a year for real estate brokerage fees. On a $400,000 sale, a 6 percent commission amounts to $24,000, while a 5 percent commission is $20,000.

LARGE NUMBERS
The Realogy report is noteworthy partly for the company’s sheer size. Parsippany, N.J.-based Realogy owns a number of brokerages, including Coldwell Banker Residential Real Estate, the largest brokerage in Florida. Realogy also franchises the Century 21, ERA, Coldwell Banker and Sotheby’s International brands.

As the nation’s biggest broker, Realogy has been pushing to hold the line on commissions, even as consumers increasingly demand discounts.

But Realogy’s annual report shows that the average commission side for its franchisees fell to 2.47 percent in 2006, down from 2.51 percent in 2005 and 2.65 percent in 2002. For Realogy-owned brokers, the average commission side slid to 2.48 percent in 2006 from 2.63 percent in 2002.

Realogy franchisee Douglas Rill, owner of Century 21 America’s Choice in West Palm Beach, bristled at the suggestion that homes can be sold for less than full commission in today’s slow Florida housing market.

A seller who offers a buyer’s agent less than 3 percent only discourages agents from bringing buyers to see the home, Rill said. He said commissions have been rising in the past year as sellers come to terms with the slow market, and he argued that the higher rates have yet to show up in the numbers.

Source:

http://www.floridahomeloan.com/2007/03/commissions-to-florida-real-estate-agents-fall-below-six-percent.html