2013 Real Estate Commissions On Par with Pre-Bubble Years

It’s been a year and a half since we looked at how real estate commissions are faring—well past time for an update.

For these charts I have estimated the total commissions for 2013 based on the sales volume and prices for the first half of the year. The final numbers will no doubt be slightly different than this.

First up, raw commissions:

Total RE Commissions on King Co. SFH

Without adjusting for inflation or population growth, total real estate commissions in King County are on track to have their fifth-best year ever in 2013, increasing 17% from last year.

Here’s what commissions look like when you adjust for inflation:

Total Inflation-Adjusted RE Commissions on King Co. SFH

Still quite strong, coming in as the sixth-best year overall (2003 slips ahead after the adjustment), with a 16% year-over-year increase.

Finally, here’s what commissions look like when you adjust for inflation and population:

Total Inflation+Population-Adjusted RE Commissions on King Co. SFH

Still a strong 14% increase over 2012, but the total drops down to a level on par with the pre-bubble years of 1999 through 2002. With these adjustments, 2013 is bested by every year from 1999 through 2007, with the exception of 2001.

Any way you slice it, 2013 is shaping up to be the best year for real estate agents since 2007, but still far short of the crazy days of the real estate bubble.


About The Tim

Tim Ellis is the founder of Seattle Bubble. His background in engineering and computer / internet technology, a fondness of data-based analysis of problems, and an addiction to spreadsheets all influence his perspective on the Seattle-area real estate market.

19 comments:

  1. 1
    ray pepper says:

    and people are still paying 6%….SHEER INSANITY…………I could possibly see people not wanting to have any hassels and waste 3% to LIST but if your a BUYER…I mean seriously…Are you Buyers still that BRAIN DEAD that you give this 3% away…????? But, then again this economy is roaring……everyone is flush with cash…New Cars are selling…. Cheesecake Factory is packed…We have money to waste apparently…

    also, if I may…what the heck has happened to the Red Fin Rebate? every property I pull up there is no money going back to Buyer..Zippo…..I checked Findwell and they have an office minimum of 7500 now! Holy Crap! Maybe its user error….

    Tim, or anyone, I haven’t dug through the Red Fin website enough but can someone elaborate if I buy a 200k house what will I get? 300k? …I think its all Zippo now? I did see the 15% referral agent blurb…so if I bought a home for 250k…buyer side commish is 7500…and Buyer will get 15% of that I assume? about 1100…is that right?? big whoop! but better then nothing….

  2. 2
    Blurtman says:

    Ira,

    Where is the party? And thanks for buying!

  3. 3

    Is This Good News or Is America Up for Sale to the Foriegn Rich Elite?

    Like our farmlands[and food prices] got took over by foreigners….

    http://www.wenatcheeworld.com/news/2013/may/19/more-wealthy-chinese-buy-seattle-area-real-estate/

    Mean while the legal American citizen Millenials give up with Seattle Real Estate?

    http://www.policymic.com/articles/28349/home-ownership-doesn-t-make-sense-for-millennials-in-2013

    No wonder the Seattle area low tier American first time homebuyer sales segment has stagnated or given up.

  4. 4
    ChrisM says:

    RE: ray pepper @ 1 – Heh. Details here:
    http://www.redfin.com/buy-a-home/refund?src=buy-box-refund

    It has definitely gotten more complicated, and no bargain on short sales (no surprise there). That said, did you ever correct your website? I recall a year or two ago it wasn’t up to date…

  5. 5
    The Tim says:

    By ray pepper @ 1:

    Tim, or anyone, I haven’t dug through the Red Fin website enough but can someone elaborate if I buy a 200k house what will I get? 300k?

    All you have to do is look on the right side of any for-sale home’s details page, the rebate you’ll get is right there.

    For a $200k home in the Seattle area right now, you’ll be able to work with a partner agent (which by the way are not agents that pay us for advertising, we vet/interview them the same as we do employees that we hire, they pay nothing up front to partner with Redfin). The commission refund would be $900.

    For a $300k home, you’ll work with a Redfin agent. The commission refund would be $1,996.

    Note these are just examples, not rules for all homes at those prices. It’s possible the seller’s agent is offering a different commission for buyer’s agents which could increase or decrease the refund. But the actual refund you’ll receive with Redfin is always stated up front, right on each home’s page.

  6. 6
    Ray pepper says:

    RE: ChrisM @ 4 – yes. Website long since fixed. But I clicked on that red fin link and as I stated it doesn’t say squat. Everytime I find a listing with red fin there is zero rebate mentioned. I will check some over 500k later. I thought everyone at least gets the 15 percent

  7. 7
    Marc says:

    Hey Tim,

    How about a chart showing the number of licensed agents carving up the pie in each of these years. My understanding is that the number of agents declined considerably from the peak. The return of bidding wars is sure to bring some of them flocking back as well as people looking to get into the business.

    Easy money! No limit on how much you can make! Just pay this desk fee and they’ll show you how!

  8. 8
    Ray pepper says:

    RE: The Tim @ 5 – Ok so about 20 percent. FindWell would give 1500 according to their 7500 minimum. We would give 5100 with our 3900 minimum. We r just smokin Everyone. Too bad our agents are all spending their time at trustee sales. We keep sending clients back to red fin. We are not sure what they were getting. To think we still get asked for more money back from time to time. These are the Buyers I just love to send to RF or Findwell ! Funny to hear them calling back wanting assistance. Sorry Buyers! We pick who we represent . You only think u do!!

  9. 9
    Erik says:

    RE: Ray pepper @ 8
    Whoa Ray! It sounds like you are in the drivers seat and not the buyers. You let these poor buyers think they are in control while the entire time you are pulling the strings of these puppets.

  10. 10

    RE: softwarengineer @ 3

    Flippers With Bags of Cash Have Apparently Left the Seattle Market Too

    Why you ask? The prices they drove up are now way TOO HIGH.

    http://finance.yahoo.com/news/investors-moving-housing-heres-why-164139184.html

  11. 11
    Ray pepper says:

    RE: Erik @ 9 – we r an empire. And I’m the king! You all can be my loyal servants if u desire.

  12. 12
  13. 13

    By Marc @ 7:

    Hey Tim,

    How about a chart showing the number of licensed agents carving up the pie in each of these years. My understanding is that the number of agents declined considerably from the peak. The return of bidding wars is sure to bring some of them flocking back as well as people looking to get into the business.

    Easy money! No limit on how much you can make! Just pay this desk fee and they’ll show you how!

    I’ve also heard that 10% of the agents make 90% of the commissions. For reasons I can’t figure out, I always do best when others aren’t. My best years were 2009 and 2011.
    So, about that party, Blurtman? I hope you like Top Ramen and Keystone Light.

  14. 14
    Blurtman says:

    RE: Ira Sacharoff @ 13 – Do you know what it takes to sell real estate?

    https://www.youtube.com/watch?v=zCf46yHIzSo

  15. 15

    “What’s your name?”
    “F you that’s my name.”
    Best real estate sales movie of all time Blurtman. Makes me want to watch it again tonight.

    I rent training rooms at Rockwell over in Bellevue for my loan originator classes…they are THE place to go for your real estate pre-licensing class and for the past several months the real estate pre-licensing classes have been packed whenever I’m on site. Worthy of some digging. I wonder if the Dept of Licensing would give us stats.

  16. 16
    Jonness says:

    By ray pepper @ 1:

    and Buyer will get 15% of that I assume? about 1100…is that right?? big whoop! but better then nothing….

    I used a place called “500 Realty” and got $10,000.00 back (60% of commission because my agent wrote multiple contracts).

    People should check it out. It’s a good deal. :)

  17. 17

    I am late to this party, I apologize…

    Tim, you note that your analysis is “based on the sales volume and prices for the first half of the year.” So did you simply assume a 6% on every transaction?

    If so, that seems like a fatal flaw to me. After all, of the now 17 comments here, three are from “discount” brokers, i.e. brokers that charge significantly less than 3% and rebate the difference to the client, and at least one from a buyer who used such a broker. While not the norm – yet – there is an increasing amount of downward pressure on the SOC.

    And the listing commission? That’s been under pressure for some time. Heck, I seem to recall some nutball who was willing to list for $500!! I just wish I could remember his name…

    So absent data about actual commissions charged, rather than an out-dated assumption that every sale results in commissions totalling 6%, I think your analysis doesn’t shed much light on the issue. Or, in other words, I suspect the actual commissions charged/earned will be more than “slightly different” from the sum of 6% x Total Sales.

  18. 18
    ARDELL says:

    Some interesting stats on # of Associations and # of members going back to 1908.

    http://www.realtor.org/membership/historic-report

  19. 19
    Jonness says:

    By ARDELL @ 18:

    Some interesting stats on # of Associations and # of members going back to 1908.

    http://www.realtor.org/membership/historic-report

    Beautiful link Ardell!

    No wonder they call it the “roaring 20’s”. In 1926 the number of agents peaked, then the bubble popped and didn’t bottom until 1935. Then the number of agents began slowly growing again, but we didn’t get back to the prior peak until 1945.

    Fast forward. In 2006, the number of agents peaked, then the bubble popped, and the number of agents has shrank every year since.

    During the Great Depression, it took 9 years to start growing the RE labor force again and 19 years to get back to where we started. In the Great Recession, we are 7 years in, and we are still trying to find the bottom of the RE labor force. It will be interesting to see if we get an increase next year. :)

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