Total Commissions Cut in Half Since 2005 Peak

Here’s a different take on sales and price data that I found interesting. I took the total sales volume of single-family homes in King County for each year and multiplied it by the full-year average sale price, then took six percent of that amount to arrive at a total amount of potential commission paid to real estate agents each year since 1989.

Total Real Estate Commissions on King County SFH

Although prices did not peak until 2007, sales volume had already been on the decline for two years by then, causing commissions to peak in 2005. Total commissions (potentially) paid to real estate agents has fallen by 47% in the six years since the peak.

However, I find it interesting that despite the big drop, agents in 2011 still took in nearly double the average $237M they got each year between 1992 and 1996, on ten percent fewer sales. Not a bad deal at all, if you ask me.

If you’re curious to play around with the numbers I used to generate the chart in this post, you can download the spreadsheet and tinker to your heart’s content. Enjoy!

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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. Tim also hosts the weekly improv comedy sci-fi podcast Dispatches from the Multiverse.

98 comments:

  1. 1
    David Losh says:

    This post is exactly to the point.

    It would also be interesting to see the number of agents that were collecting those commissions.

  2. 2
    Eastsider says:

    The 6% commission rate has declined in recent years due to rebates offered by Redfin and others.

  3. 3
    Ray Pepper says:

    RE: Eastsider @ 2

    Hardly, Eastsider………..The market share by RedFin and “others” continues to be very minimal.

    We alternative Brokerages educate there is another way but the masses will still need years to understand it. Furthermore, with high office minimums of $5000-6000 even the alternative Brokerages are pretty useless on homes less then 275k.

    The insanely high listing office fees by RedFin and other “alternative” Brokerages remains disturbing considering all the information and education that is provided to the consumer. The adaptation of MLS4Owners model for SELLERS ONLY continues to meet resistance by even the alternative Brokerages due to the very low margins of profit.

    1.5% with a minimum fee of $6,000 remains an INSANE amount to charge a seller to LIST a home and assist in its closure. But, as everything they will be forced to adapt as well to consumer demands and change. Consumers will NOT stand for 1.5-3% listing office fees in the years ahead. It remains one of the biggest SHAMS that exist today!

  4. 4
    MacroInvestor says:

    Commissions are not down from the peak. They are up from the 80s/90s norm. Everything after 1996 is bubble world and never would have happened if regulators forced banks to play by decades-old rules.

    Agents, mortgage brokers and the rest of the housing leaches got to live high on the hog for a decade or so. Now it’s back to working for a living and the marginal/low performers are likely out entirely.

    Kudos to Ray — yes, it’s shocking that it costs 10% of your equity to sell a house. Nobody should stand for that.

  5. 5
    Peter Witting says:

    How much does that average out to per agent? Any way to see the number of active agents each year? My guess is that there was a “bubble” of real estate agents who rode the wave but then couldn’t make it during more normal times.

  6. 6
    wreckingbull says:

    RE: MacroInvestor @ 4 – Absolutely. Where I live, more and more people are arranging sales without the use of traditional real estate services. I am not talking about marketing your home the the masses, but rather strategically selling your home to friends, or friends of friends. $1000 worth of attorneys fees, and you are done.

  7. 7

    By Peter Witting @ 5:

    How much does that average out to per agent? Any way to see the number of active agents each year? My guess is that there was a “bubble” of real estate agents who rode the wave but then couldn’t make it during more normal times.

    Oh, totally. In ’05 or so everybody and their uncle became a real estate agent. A huge number since then have let their licenses lapse or couldn’t afford to stay in business.
    I think Redfin and other alternative brokerage models have had some impact, as a fair number of “traditional” agents now rebate some commission back to the buyer or charge less to list than they formerly did, but the overall reduced commission mostly comes from less agents out there.

  8. 8
    ChrisM says:

    I’m surprised no one mentioned inflation. According to this source (http://www.coinnews.net/tools/cpi-inflation-calculator/) which I just googled (so don’t know how trustworthy they are) $1.00 in 1989 is equivalent to $1.81 today.

    Would be interesting to see the graph adjusted for inflation. Of course, that opens up the can of worms about what gets included in inflation…

  9. 9
    Marc says:

    For good or ill, the lower prices we saw in 2011 as compared to 2010 resulted in more total sales. That’s simple supply and demand, lower prices tend to lead to greater numbers of sales. Since prices continue to fall I expect an even greater number of sales in 2012 (although not a huge increase).

    I suspect the overall commissions earned in 2012 won’t significantly increase much like 2011 closely mirrored 2010. However, that’s not necessarily a bad thing because as Ira and Peter pointed out, there were way too many real estate agents out there carving up the commission pie as it shrank from the 2005 high.

  10. 10
    Marc says:

    A related and more interesting question to me is how much revenue does it take on a per transaction basis to create a viable brokerage model. Obviously, Windermere, JL Scott, and the like argue 3% is required. Redfin has been proving otherwise or so it would seem. The fact that they’ve raised their prices/reduced their rebate multiple times and are currently testing an even higher price in Boston makes you wonder what’s next for them. How heavily have they been relying on the massive venture capital they’ve raised?

    I’ve been waiting ever since the Boston announcement to see if they’d roll out the 33% rebate nationwide and predicted back in July it would come right at the first of this year. So far they’ve announced nothing yet. It seems to me that Redfin has been moving more and more to a traditional model much like ZipRealty who completely eliminated its modest 20% rebate and agents-as-employees model last year.

    Ray’s right when he said the alternative models like Redfin, 500Realty, Findwell, MLS4Owners, and my firm have very modest combined market share (and Redfin makes up the lion’s share of that subtotal).

  11. 11
    ARDELL says:

    MacroInvestor quoting Ray “…it’s shocking that it costs 10% of your equity to sell a house…”

    Unless the home is owned free and clear, the cost to sell is much higher than 10% of the owner’s “EQUITY”. In many cases the cost is 50% to 100% of the owner’s “equity”.

    Eastsider: “The 6% commission rate has declined in recent years due to rebates offered by Redfin and others.”

    Even when the buyer uses a lower cost alternative like Redfin, the seller still pays the full amount from “equity”, with the buyer receiving the benefit of lower cost and not the seller. So the ding to the seller’s equity is the same, whether the buyer uses a lower cost alternative or not.

    Using a transaction of mine where the buyer used Redfin and the seller used me. Equity approx $100,000 (using real costs and fictitious $ equity for confidentiality reasons)

    3% to Redfin $11,700
    $10,000 flat fee to me
    $5,000 toward buyer’s closing costs
    $1,300 for repairs from home inspection
    1.78% Excise Tax $6,900
    Owner’s Title Insurance and Escrow costs: $2,000
    (not including final RE tax, PUD-HOA or utility charges as those would be paid even if home not sold)

    $100,000 equity (fictitious number for confidentiality reasons)

    18% of “equity” paid by seller on buyer’s behalf for their costs and minor repairs, including an allowance for them to pay their buyer’s agent (and keep the change, if any). $17,959.50

    10% of “equity” paid to Agent for the Seller $10,000

    6.9% of “equity” for excise tax: $6,900

    2% of “equity” for Closing and Title Insurance Fees: $2,000

    “Equity” is the difference between the Sold Price and what the seller owes to lenders prior to other closing costs. Consequently the $38,860 is

    …10% of the sold price

    …but 39% of the seller’s “equity”.

    As David Losh points out and often, the “rebate” models do not help the economy or home prices reach a true equilibrium point, as they are no better than an $8,000 carrot/credit from the government. The cash back/rebate model is still a carrot incentive to buy, same as the Government’s Tax credit.

    The “savings” in commission dollars are still reflected in the total sales price, which is used as a “comp” for future market value purposes.

    If the seller and buyer save 2% on commissions in every transaction, and that 2% were required to come off the Sold Price instead of cash in hand, home prices would systemically decline by 2% with each sale. Home prices would level down as a result of the reduced commission structure.

    So “rebates” may help the consumer who is in the transaction…but they hurt the consumers who are buying homes in aggregate. Consumers generally would be better servied if that commission reduction was reflected as a reduced sold price, vs cash in pocket.

  12. 12
    Marc says:

    By ARDELL @ 11:

    “… the “rebate” models do not help the economy or home prices reach a true equilibrium point, as they are no better than an $8,000 carrot/credit from the government.

    The US Department of Justice would beg to differ with you on that one. They’ve got a whole website on the subject which, for some reason, is down at the moment. Here’s a cached version: http://webcache.googleusercontent.com/search?q=cache:JDKrWFZnrPgJ:www.justice.gov/atr/public/real_estate/rebates.html+&cd=3&hl=en&ct=clnk&gl=us.

  13. 13
    ARDELL says:

    RE: ChrisM @ 8

    Within the context of this post, I don’t think applying an inflationary factor would be appropriate, because the cost of doing business has decreased and not increased over the years. Brokerages may still take out high cost full two page ad spreads in the Sunday Paper, don’t know…is there still a “Sunday Paper”? Brokerages may still take out fancy home ads in flashy, full color, free magazines in racks at the Grocery Store. Don’t know. Haven’t looked at one in years.

    Going back to when I started in 1990, the cost of doing business has decreased, so applying an inflationary factor would not be appropriate. No driving to offices for keys, most offers faxed vs hand delivered to the agent for the seller, many forms conveyed via email vs in person for initials, etc. I still do most full, first offers in person, but not an initial on a minor change or counter.

    If you are going to ratchet up for inflation…you have to subtract for decreased cost of doing business at the same time. Best to just leave that alone.

  14. 14
    ARDELL says:

    RE: Marc @ 12

    I’m familiar with the concept Marc, and agree with the DOJ that reductions in commission are “good” generally. BUT, that said, until the price is adjusted for future home buyers benefit, the result is not optimal.

    When an appraiser calls me when using one of my sold listings as a “comp”, he only reduces the publicly stated “sold price” by seller credits toward closing costs.

    Using a builder’s example. A builder always wants to stuff the concessions into the sold price so that the soft vs hard dollars support his comps for future sales. The Sold Price may say $715,000 (using an actual example here), but the buyer actually paid $684,000. This has been standard builder practice since the beginning of time, so their Spring Bump is bouncing off of a higher number from weak winter period stuffed with concessions and incentives within that sold price.

    The next buyer comes along and the builder says “the house next door just sold for $715,000!”. The County records show a sold price of $715,000. The next buyer is duped into thinking the $684,000 the buyer “paid” is $715,000, without getting the same concessions.

    Same with “rebate” commission models. The “rebate” being hidden from view misleads the next buyer who is using that price as a comp to determine offer price.

    The market as a whole would be better served if the sold price were stated as a net price vs gross prior to commission reductions and other concessions.

  15. 15
    Ray Pepper says:

    Oh Lord, I think I have went round and round with so many Agents about this in 2007 and most likely Ardell many times in the past. I will just use this example because it occurred various times in the last 4 years.

    Seller lists home through 500 Realty or MLS4Owners for 400k…It sells and they spent 3% to Buyers agent, 500 to us, and title, Escrow, etc. (about 14k)

    Same Seller Buys through 500 Realty a 400k home and receives about 8000k .

    The entire sale of their home, and step up to the new home, cost 6k out of their pocket or 1.5%..

    These numbers are real anyway you slice it and sellers here at The Bubble must be BRAIN DEAD to ever pay more then 500 to LIST their property…..

    The numbers speak for themselves and MLS4Owners has sold more properties then ALL of us ALTERNATIVE type Brokerages combined including the “hanging on by a respirator” RedFin which I know is blowing through VC day after day after day. Yes, Marc their 33% Buyer rebate is coming or some other form of revenue generation that will be at the expense of the consumer. They simply have no choice and the sooner they partner up with a BIGGER ENTITY the sooner they can reach REAL profitability that will satisfy the appetite of the VC. Going public was their chance and market forces were against them as it is now. It will be a slow grind downward as we have witnessed with LEDR and ZIPR because they cannot sustain in the decade of “give-back” re: short sales, reo’s, and deed in lieu’s.

  16. 16
    ARDELL says:

    The next frontier as to commission dollars and the consumer should be “referral fees”. It has been standard practice for agents to refer clients at an undisclosed cost of 25% of the commission.

    If an agent in Idaho is selling a house and calls an agent here, because the buyer is moving from there to Seattle, the agent who made that call is usually entitled to 25% of the commission on the purchase side in Seattle. Rarely is that shown anywhere, or conveyed to the parties at any time. It’s usually stated as “Oh, I know someone in Seattle who can help you on the other end.” as if it is a gratis gesture. That could be a move within State as well, such as Western WA to Eastern WA or Seattle to Bellingham.

    Many large companies (all companies, not real estate companies) require the agent pay 35% or so of the commission to the hiring company on a relocation transaction. Usually 50% of the commission on the leaving-listing side and 35% or more on the buy side.

    Consider the impact on a $600,000 lateral-cost transferee, who is selling to leave and buying on the other end. $36,000 in potential commission dollars on the table for both ends, the referral fees are usually $13,500 paid to the people NOT handling the transactions, through the transferee’s employer’s requirements and real estate brokerage contracts.

    If you take the 2012 figure of $462,000,000 and assume 25% are paying 25% in referral fees on average, that is $28,875 million paid for “a one time phone call” saying…”I have a referral for you”.

    To answer part of Marc’s question…many if not most large real estate brokerages both receive and pay referral fees as a significant part of their cash flow and income stream.

  17. 17
    Sweet Pea says:

    By ChrisM @ 8:

    I’m surprised no one mentioned inflation. According to this source (http://www.coinnews.net/tools/cpi-inflation-calculator/) which I just googled (so don’t know how trustworthy they are) $1.00 in 1989 is equivalent to $1.81 today.

    Would be interesting to see the graph adjusted for inflation. Of course, that opens up the can of worms about what gets included in inflation…

    I would like to see a study of the impact on inflation of the leverage incurred over the past 20+ years. Easy consumer credit probably means higer prices on more than just housing.

  18. 18
    billybeer says:

    I have to agree with Ray. The fees associated with selling a home are borderline predatory. Especially so given the fact that the commission is payed out based on the selling price for both the buyer and the seller. What’s the motivation for the buyer’s agent to get a low price when it means he/she gets a lower commission? I can’t think of any other profession with such a large conflict of interest.

    Now we get shenanigans like adding concessions into the price that doesn’t change the actual listed price which further inflates prices and obfuscates real market values. These “concessions” need to be accounted for and reflected in the actual sale prices. No excuses. No other major industry conducts business in this way (except may Wall Street).

    It would be interesting to see those numbers shown as a multiple of the King Co. median house price for each year….

  19. 19
    ARDELL says:

    RE: Ray Pepper @ 15

    I don’t disagree Ray, but what % of sellers are “For Sale by Owner in the mls” paying a $500 to $1500 flat fee?

  20. 20
    Marc says:

    Ardell,

    The referral fees of which you speak disgust me. I think even less of the relocation companies and their business models. The poor saps using them and the employers empowering it are wasting a ton of money in my opinion. Why anyone transferring to a brand new area wants to buy a home immediately upon arrival and before they’ve learned the area is beyond me.

    We recently had a client buy a home on Mercer Island from a doctor. The good doc moved from the midwest with wife and two daughters for new job at a Seattle hospital. Wife and daughters decided the Seattle weather was too much and hightailed it home in under a year. So the house went back on the market and they took a huge bath a year after they bought it. Sucks for them.

  21. 21
    ARDELL says:

    RE: Marc @ 19

    The fact that there is almost ZERO transparency about these fees, and even a requirement in the employer contract with the brokerages that the agent NOT disclose the referral fee to their client, is even more disgusting.

    How can a real estate brokerage or agent agree to not disclose something relevant to their home purchase or sale to their client? Is that even legal in this day and age?

  22. 22
    MacroInvestor says:

    RE: Ray Pepper @ 15

    There’s so much more Redfin could do that would make them invaluable to the consumer, but right now all they do is regurgitate public and MLS data. They won’t survive on just that. And they won’t survive just being an agent that’s a little cheaper than the full priced brokers. I hope they start thinking outside the box, because I like what they’ve started. And no, blogging and trying to be social media won’t cut it — nobody needs more of that.

    Yes, you have to be pretty clueless to go with a full priced broker. Look at stock brokers. Nobody still pays $200 to trade stocks.

  23. 23
    Marc says:

    RE: ARDELL @ 20 – Bingo. If they actually told their clients what they were doing and the client had the opportunity to agree to it or consider alternatives, then I’d be fine with it. We can all guess how often this arrangement would be blessed thus the cloak and dagger.

  24. 24
    Marc says:

    RE: MacroInvestor @ 21 – Could you give some examples? I’d love some ideas that my firm could implement. Admittedly, not having $40+ million in VC may limit our ability to fire up new initiatives but that doesn’t mean we can’t explore it.

  25. 25
    Ray Pepper says:

    RE: MacroInvestor @ 21

    etrade and scottrade all day long for me! Couldn’t agree more..

  26. 26
    MacroInvestor says:

    RE: Marc @ 23

    Sorry, I’m afraid my ideas are staying in my business plan ;)

  27. 27
    Marc says:

    RE: MacroInvestor @ 25 – Fair enough. Best of luck with your endeavor. I’d love to hear what you’re working on if you’re ever so inclined.

  28. 28
    Ray Pepper says:

    RE: Marc @ 23

    The “saving of RedFin” in its present state will not occur. With homeowner sentiment very poor and the markets going forward controlled by REO’s and Short sales their hands are strapped. However, their data and pioneering information for the consumer will be adapated to another entity as they merge this decade into a different company. We must thank Globespan capital Partners for their 15 mill and the other 31 mill by Greylock Partners, Madrona Venture Group, Draper Fisher Jurvetson, Vulcan Capital and The Hillman Company for their VC for they will NOT see a return on their investment for another decade IF EVER.

    The shallow give the credit to Glenn and all his supportive staff but the real kudos go to all these VC investors for bringing change to a system and empowering consumers, that was in severe need. But, like all other sour investments timing is critical and they truly did miss the boat.

  29. 29
    Marc says:

    RE: Ray Pepper @ 27 – I agree that the VCs made Redfin possible and Redfin’s innovations changed the industry or at least contributed mightily. I have to disagree that they’ll fail on their own merits. I think they’ll continue to evolve but have already reached sufficient critical mass to survive. Sadly, that may be evolution towards a more traditional model.

    A merger of some sort with a player already on or soon to come to the scene certainly sounds plausible.

  30. 30
    MacroInvestor says:

    RE: Ray Pepper @ 27

    I have to disagree. The timing is great. Everybody wants to save a buck in a recession. The problem is they don’t offer anything that can’t be (and has been) easily copied by others.

  31. 31
    Marc says:

    If things do become dire for Redfin I think they can eliminate the large bulk of their technology staff and massively reduce their overhead. I find it difficult to conceive how they will continue to add new technologies that significantly move the needle in terms of buyer/seller revenue. Perhaps that’s part of your thinking as well.

    Then again, maybe that’s my own shortcoming and lack of tech chops.

  32. 32
    Ray Pepper says:

    RE: Marc @ 28

    Marc, they will continue to survive(but that in itself is a failure-because to survive without profit is not a model for business) but I assure you their capital will be spent month after month in a failing cause. You do NOT have to look any futher then their 15% back to the consumer utilizing partner agents now. From 66% to 50% to 33% to 15%…their “profitable” model is broken but their data is not. There is real value to this and keep your eye on the mighty Google and never underestimate their power going forward…There just maybe a small payday at the end for all the VC to get a lil morsel back of the money dropped in.

  33. 33
    whee says:

    Redfin has pretty well saved our bacon. Without them we wouldn’t even know about some of the alternative options for property buying out there. We’d just be flailing around and probably have missed out on some amazing opportunities from our perspective (we are looking for land with infrastructure, and nobody has that one covered except redfin, with their pretty swell land and ‘other’ listings.)

  34. 34
    ARDELL says:

    RE: Marc @ 30

    If you are correct in your Boston analogy and assumption, and all companies in turn move to a 2% model on each side, which is quite common now for anyone who is both buying and selling, the advantage will be eradicated. All it takes is for every seller to offer 2% vs 3%, once it is determined that 2% is the point where the dust settles, and there would be no difference again one company to the next.

    Except for yours, which is a “non-contingent” fee paid whether someone buyers or sells or not. As in all continent vs “non-contingent” fees, the “non-contingent will always be lower, regardless of the field. I doubt that will become the model for the market as a whole.

  35. 35
    2kt says:

    RE: Ray Pepper @ 27 – Raymundo, Redfin will outlive 500 Realty.

  36. 36
    MacroInvestor says:

    The whole brokerage compensation model is outdated. Imagine leaving your car at the mechanic, and no matter how much work is involved the price for everyone is the same. I just need a screw tightened. You need an entire engine rebuild. We both pay $2000. You’d say that’s crazy, right?

    So real estate brokers should be ala carte as well. You walk in and get a price list: so much to send a photographer over, so much to list in the MLS, etc… So many dollars per hour to have someone sit at an open house, fill out paper work, close. If you price for a quick sale, you should pay less than someone who is more work. Brokers distinguish themselves by price and quality of work — just like auto mechanics and most other businesses do now.

  37. 37
    2kt says:

    RE: ARDELL @ 16

    Referral fees should not exceed 5%. 25% figure is outlandish. Overall, the sooner brokerage industry switches to tiered structure, the better off it is.

    There are some expenses in selling a home, so 6% fee can be justifed on the homes up to $100,000, but after that it should go down by .5% every $100,000 and end at 2% of the sale price on of homes $700,000 or more. At the same time, agents probably shoud charge some fees for showing homes on hourly basis.

  38. 38
    whee says:

    I just wish there was some better way for people wanting homesteads, admittedly a small part of the overall home-buying market, but not all of them want to live in the ozarks when there is plenty of land all over if they only knew it was there. Developers have done a fabulous job convincing people that buy and build or buy and clean up a teardown is insanely expensive when it can be dirt cheap. I myself was surprised once redfin’s data showed me a better way by simply making available the listings of vacant land, often with infrastructure, and often less than the cost of a new home, even factoring in custom-build costs.

    And yes, I know I sound a total commercial for redfin, but seriously, they are the only resource for those who don’t just want a 2000 square foot house on a 3000 square foot lot, and especially those who want enough lot space for animals or gardening or small-scale farming.

  39. 39
    Ray Pepper says:

    RE: 2kt @ 35

    now thats a bet I will take and glady CASH IN ON! Your on!!!….500 Realty as it stands today or Red Fin as it stands today…WA Law / Shop Prop / Findwell/MLS 4Owners should also easily out last Red Fin in its present state. But, the bet is between you and me….Lets dictate the terms, parameters of what “staying in business” is, (for instance if they get another round of VC-which they surely will not, but if they did, that constitutes FAIL in my book as well!! )..

    You see the beauty is the consumer can use all their information for FREE so in essence Red Fin is entirely useless as a Brokerage unless you enjoy their ever diminishing rebates. As for years in the field, I don’t think any of their Agents have a decade under their belt so you cannot sell “expertise” in the field. If you have the milk…why do you need the cow? Get the picture? You should be starting to realize another avenue they can make money! Are you? But, the question is will people pay for the data………..? Answer………….No, they will not …Not at this time……..they R strapped and hands are tied.

    The Red Fin value is their data and nothing more…People can use this data like Zillow for FREE and then engage anyone they desire at a price point far superior to that being offered by the supplier..VC is onto this and watch for change very soon!

    Please dictate to me your term..”outlive” and YOU ARE ON!”

  40. 40

    As I’ve commented in the past, these declines are even greater for state excise tax collections. Freddie and Fannie don’t pay excise on their sales, nor do any transactions which are bought at a foreclosure sale.

  41. 41

    As wonderful the information Redfin provides is, and as wonderful the compensation model they have for agents is, the fact remains that they, and everybody else who sells real estate, traditional or alternative, are part of the system that needs people to buy and sell real estate. I think Ardell alluded to this a few posts back. Rebating some of the commission back to the buyer is great. If I were buying a home right now I would want that. However, it is a carrot, a way to make homebuying more appealing.. Some people should not be buying houses, and there are also periods where everything is terribly overpriced. Is a Redfin, or a WaLaw, or a 500 Realty going to tell clients ” You shouldn’t be buying a house right now. Keep renting and call me in three years after prices have dropped.”?
    No, they all want you to buy houses because that’s how they stay in business. Just like Windermere, John L Scott, etc.

  42. 42
    ChrisM says:

    RE: ARDELL @ 13 – I think any graph looking at dollar values over 20 years has to factor inflation into account.

    Here’s what I find kind of shocking – if you take inflation into account I suspect 2011 commissions may be *lower* than 1989, despite population increase.

    Funny you mention those stupid grocery store things. I occasionally pick them up out of morbid curiosity, esp. when traveling. But, geez, I’ve never used them when buying or selling!

  43. 43
    David Losh says:

    RE: Eastsider @ 2

    The commission declines are due to price declines.

    As the commenters here have pointed out redfin rebates 2%. That 2% is a part of the mortgage the consumer takes out. The consumer is taking out a bank loan for 2% of the sales price and the hope is they will spend it.

    The consumer pays interest on that loan for 30 years.

    redfin and Zillow are bankster sites. The whole idea is to keep people paying premium prices for property for big commission dollars, that are based on those high prices. Mortgage companies need those high prices. The stock market needs those high prices.

    Once prices fall far enough, and they will, more people will by pass the agents in favor of a WaLaw business model, or some attorney driven model, for a flat fee.

    Agents will have to work harder, and smarter to actually earn a commission.

  44. 44
    The Tim says:

    By Ray Pepper @ 28:

    We must thank Globespan capital Partners for their 15 mill and the other 31 mill by Greylock Partners, Madrona Venture Group, Draper Fisher Jurvetson, Vulcan Capital and The Hillman Company for their VC for they will NOT see a return on their investment for another decade IF EVER.

    The shallow give the credit to Glenn and all his supportive staff but the real kudos go to all these VC investors for bringing change to a system and empowering consumers, that was in severe need. But, like all other sour investments timing is critical and they truly did miss the boat.

    Hilarious stuff, Ray. Because surely you know more about Redfin’s business than seasoned investment firms who have seen Redfin’s financials and whose entire job is to analyze businesses and invest millions of dollars in ones that are highly likely to capitalize on massive market potential.

  45. 45
    David Losh says:

    RE: Marc @ 12

    What the DOJ said was that putting money into the hands of consumers was a good thing.

    The way Sears envisioned the rebate program in the 1980s was to give home buyers “store credit” at Sears if you bought a home through Coldwell Banker, which they owned at the time. They also owned Discover Card.

    Online Brokerage was meant to be a “one stop Shopping” experience where you could get your ELoan, as you shopped for your home online. The rebate could be used for mortgage fees, and costs. Does that sound good?

    The Department of Justice determined that Sears offering an inducement to buy was detrimental to the consumer. Twenty years later when we had the mortgage money hey day, it was a great idea to take on more debt.

  46. 46
    turf says:

    Re Ira@41. the property at 14422 49th pl w edmonds 98026 isn’t perfect (tri-level) but it is a good example. would probably rent for at least $1500 a month, 18k a year. Priced at 235k, do you think it’s going to drop to 195k in the next 3 years? Every economist has a different opinion, so if one can afford a property and are going to live in it for the forseeable future, now COULD be a good time to buy. On the other hand if one has no money……….Best to wait for the next boom.

  47. 47
    Eastsider says:

    Beside commission rebates, distressed property sales generally have reduced commissions. The Jan 10 post “Federal Government Sells Over 1 in 4 Seattle-Area REOs” pointed out that 40% sales in King, Snohomish, and Pierce Counties in 2011 were distressed sales. So average commission rate has trended lower in recent years and is definitely measurable.

  48. 48
    ARDELL says:

    RE: David Losh @ 43

    You may want to check your numbers on that one. I don’t think the rebate is 2%, or states the rebate as a % of purchase price at all. You don’t want to spread misinformation about what other companies do and don’t do.

  49. 49
    David Losh says:

    RE: ARDELL @ 48

    Of course you are right. I got caught up in the Ray Pepper 500 Realty.net examples.

    Sorry, but the concept is the same.

    This is borrowed money that the consumer signs a loan for. The rebate puts the money back into the consumers hands, but I would also like to know how much “cash” actually makes it out of escrow.

    I know some cash does because there was some talk about people buying new couches, or dining sets with the money.

    A 30 year mortgage for a dining room set?

  50. 50
    David Losh says:

    RE: Ira Sacharoff @ 41

    There aren’t any thumbs ups today, but Ira made the best point here, once again.

  51. 51
    ARDELL says:

    RE: ChrisM @ 42

    Commissions don’t necessarily comply with that theory, because of changes over time in splits and desk fees. A new agent in 1990 generally got to keep half of the $6,000 commission on a $200,000 house, and likewise the brokerage kept half. Today, very few if any agents pay their brokers half their commission, or with no annual cap.

    So your thinking is correct that with the same 6% commission on higher sale price than 20 years ago, brokers are making much less. But not because of inflationary factors. That is because agents keep more of the total commission dollars, and give less to the brokerages. In many if not most cases, much less. 50% was the norm 20 years ago. Now the norm for a split is more like 70/30, or less to the brokerage. Or no split at all, with the brokerage being a landlord surviving on monthly desk fees primarily and even solely.

    The only agents on 50/50 splits would be brand new agents. So brokerages generally make the most money off of their least competent, vs most competent agents. As soon as the agent becomes “competent” he demands a higher share of the commission as a result.

    In general agent commissions are MUCH higher than 20 years ago because of these changes, and brokerage fees are much less, without considering inflationary factors.

  52. 52

    By Eastsider @ 47:

    Beside commission rebates, distressed property sales generally have reduced commissions. The Jan 10 post “Federal Government Sells Over 1 in 4 Seattle-Area REOs” pointed out that 40% sales in King, Snohomish, and Pierce Counties in 2011 were distressed sales. So average commission rate has trended lower in recent years and is definitely measurable.

    Fannie and Freddie generally offer 3%, at least on the buyer side. For a long time Fannie offered 3% plus $1,000. There are a few banks that don’t offer 3% on the buyer side. Short sales might allow less.

  53. 53

    RE: ARDELL @ 51 – I attribute those more favorable splits for agents to Keller Williams. More and more companies seem to be offering the same deal as Keller Williams.

  54. 54
    ARDELL says:

    RE: Kary L. Krismer @ 53

    I don’t know what Keller Williams does or doesn’t do, but I do know the most favorable splits I have seen and no split at all, but desk fee only, came long before there was a Keller Williams and in markets where there still is no Keller Williams. Though what you say may be true in the Seattle Area. In other markets it was RE/MAX who broke the mold on commissions many, many years ago.

  55. 55
    MichaelB says:

    By The Tim @ 44:

    By Ray Pepper @ 28:

    We must thank Globespan capital Partners for their 15 mill and the other 31 mill by Greylock Partners, Madrona Venture Group, Draper Fisher Jurvetson, Vulcan Capital and The Hillman Company for their VC for they will NOT see a return on their investment for another decade IF EVER.

    The shallow give the credit to Glenn and all his supportive staff but the real kudos go to all these VC investors for bringing change to a system and empowering consumers, that was in severe need. But, like all other sour investments timing is critical and they truly did miss the boat.

    Hilarious stuff, Ray. Because surely you know more about Redfin’s business than seasoned investment firms who have seen Redfin’s financials and whose entire job is to analyze businesses and invest millions of dollars in ones that are highly likely to capitalize on massive market potential.

    Sounds like a “sure bet” Tim. Hopefully it will all work out for you.

    The “highly likely to capitalize on massive market potential” part of your argument may be a bit of an overstatement by you Tim. Surely venture capital investors know that 9 out of 10 ventures they invest in will fail, but they are hoping to hit a Google type investment 1 in 10 times.

    When it becomes apparent that the RedFin business scenario is a bit less rosy, you may see the other, ruthless side of venture capitalism. The money doesn’t keep flowing, unless the business is growing. Is RedFin growing?

  56. 56

    By turf @ 46:

    Re Ira@41. the property at 14422 49th pl w edmonds 98026 isn’t perfect (tri-level) but it is a good example. would probably rent for at least $1500 a month, 18k a year. Priced at 235k, do you think it’s going to drop to 195k in the next 3 years? Every economist has a different opinion, so if one can afford a property and are going to live in it for the forseeable future, now COULD be a good time to buy. On the other hand if one has no money……….Best to wait for the next boom.

    While I can’t comment on a specific listing, it’s obviously a much better time to buy a house now than it was four years ago. Right now, there are lower tier homes that would generate a positive cash flow if you rented them out. And at some point home prices will rise. I don’t see home prices rising anytime soon, but my gut feeling is that lower tier homes are closer to the bottom than their higher priced brethren. My comment @41 wasn’t that I felt that prices were going to be lower three years from now. I figure they’ll be about what they are now,but my comment was that people who sell real estate want you to buy real estate. Many agents hang out with other agents and drink the Kool-Aid. There were a ton of real estate agents who have lost their own houses to foreclosures and to short sales. Not enough of them were reading Seattle Bubble.

  57. 57
    ChrisM says:

    RE: ARDELL @ 51 – Thanks, your response is quite informative! (since I can’t “bump” your response)

  58. 58
    ARDELL says:

    RE: ChrisM @ 57

    :) (since I can’t bump yours back) We got used to those thumbs up and thumbs down very quickly, didn’t we? I miss them.

  59. 59
    Scotsman says:

    Redfin will survive. Worst case is that they eventually match other brokerages on price bur offer better tech, tools, and data along witg something new- agent reviews. At a time when many distrust realtors confirmation of an agents competence and character have real value. I can even see paying a small fee for access to site and tools.

  60. 60
    Scotsman says:

    Smart phones are a bittch to type on.

  61. 61
    David Losh says:

    RE: Scotsman @ 59

    As the price of property gets lower there will be fewer commission dollars to go around.

    The second thing is that even a meat head like me can figure out the internet.

    You guys, and you know who you are, should have never let me go to an Inman News REBar, especially with a Daniel Rothmal pitted against Diane Lones.

    Scotsman, this thing is rigged. A bunker dweller like you should know that. Online reviews?

  62. 62
    MichaelB says:

    RE: Scotsman @ 59

    I could see RedFin getting acquired by John L Scott or a similar real estate firm…

  63. 63
    Ray Pepper says:

    RE: The Tim @ 44

    Tim, the seasoned investment firms I mention did NOT bank on the BIGGEST collapse in housing since the Great Depression. Red Fin was founded in 2002 and the VC followed in subsequent years. In May 2006 Paul Allens Vulcan capital (which is a complete joke-4 letters-CHTR) dumped 8 million in during a time of high hopes. Then the rest of the money followed. Oct 2011 another 15 million of VC flows in while chasing the other 31 million.

    Like any investment timing was critical. They bought into a dream of change but what they did not realize was they were about to face forces that were never planned on and now GOOD money continues to chase bad.

    I eagerly await to hear what Red Fin announces next and continue to thank all the VC for continuing to ATTEMPT changing an industry that is surely in need.

    Finally Tim here is the hilarious part: “whose entire job is to analyze businesses and invest millions of dollars in ones that are highly likely to capitalize on massive market potential. ”

    I may be the first to tell you this Tim but capitalizing on MASSIVE MARKET POTENTIAL is impossible when the CONSUMER DOES NOT WANT THE PRODUCT BEING OFFERED!!!!!…The decade ahead will be filled with disgust and hatred toward everything housing related because so many millions lost their home and we will have to endure RENTER NATION for many years ahead. Good Luck on selling a DREAM of Home Ownership this decade Tim.. Red Fin will surely need this dream to return to the masses if it wants to maintain any resemblence to its original business plan.

  64. 64

    RE: Scotsman @ 60RE: Scotsman @ 59 – Redfin and JLS both have good consumer websites, but the problem is, they cannot necessarily capture those using them.

    As to your smart phone, if you have an Android, use voice recognition. It’s better than Siri, per Wozniak.

  65. 65

    By MichaelB @ 62:

    RE: Scotsman @ 59

    I could see RedFin getting acquired by John L Scott or a similar real estate firm…

    I doubt it would be JLS, because they already have decent web technology, which would be the only valuable asset other than the name. Also, JLS is local. If Redfin was bought, it would more likely be bought by one of the larger national firms, and possibly only the technology would be bought. The rest of the company would be a liability.

  66. 66
    Haybaler says:

    RE: Ray Pepper @ 3RE: MacroInvestor @ 4RE: Eastsider @ 2

    I remember that a standard Listing commission was 3% during the 70’s, for both sides of the deal.

    At that time a typical house could be purchased 20-30K.

    Realtors and Brokers were making a go of it on Half the percentage on One Tenth the Sale price.

    …or maybe they weren’t (making a go of it), but that was the deal prior to the mega chain realestate companies taking over the marketplace.

  67. 67
    David Losh says:

    RE: Haybaler @ 66

    The commission was 7% to 10% in the 1970s. It was lowered when the upper tier passed $500K some time in the late 1980s, or early 1990s.

    Also there is a point, today, where the commission lowers to 5%. I think it’s over a million, but the threshold gets murky about $700K.

  68. 68
    David Losh says:

    The only hope for the over all economy is if these loans currently on the books, get paid off. I don’t see where we will be refinancing our way out.

    Prices will continue to come down, but people will pay less in interest.

    What’s the choice? Short sale, or foreclosure? or Principle Only transactions, with wrap around mortgages?

    Are people going to continue to dump 20% into a down payment they will never see in equity, or pay 20% against another persons mortgage to amortize it more quickly? That would be some serious skin in the game.

  69. 69
    Nell says:

    The discussion of referral fees explains a lot about our experience when we moved about 2 years ago.

    Our selling agent (who is excellent) referred us to an agent in our target market. We met with the gal and concluded that she wasn’t a fit for us, she had a ‘got rocks’ persona, and found another who had a great reputation for service and wore sensible shoes.

    Our selling agent wasn’t happy and tried to get us to go back because his gal had great stats (which she talked about a lot when we met with her). We happened to know her re market very well, the homes are very expensive, so of course her stats would look great.

    Lesson for those who want referrals to stick: ask your client what attributes they want from a buyer’s agent and what turns them off.

  70. 70
    MichaelB says:

    RE: Kary L. Krismer @ 65

    Good point Kary

  71. 71
    Haybaler says:

    RE: David Losh @ 67
    Maybe I had a special arrangement and have forgotten that fact.

    I remember dealing with an office Broker in Lakewood. Her name was Tharon Kirby. Listings were 3% on improved property… I was doing multi plexes, duplex, fourplex…Unimproved land was 10%.
    I remember she was keeping half and paying half to the selling office.

  72. 72
    ARDELL says:

    RE: Haybaler @ 66

    Just for perspective, I got my first job at the bank in 1972 with an annual starting salary of $4,800. My first annual raise in 1973 took me up to $5,200…and I was making the same as my Dad. I think going back to the 70s as to RE Commissions and trying to compare to today is a bit of a stretch, guys. :)

  73. 73
    Haybaler says:

    RE: ARDELL @ 72
    Not to beat a dead horse, But, my point was that the total percentage of a transaction was so much less.
    The realtor industry has doubled the percentage at the same time that total gross sales prices have increased.
    I vaguely remember the justification for charging higher commissions was the increased visibility our listings would get by the chain brand name offices, which were better able to compete for purchasers with larger advertising budgets.

  74. 74
    ricklind says:

    RE: Ray Pepper @ 63RE: MichaelB @ 55

    Both comments are very good. But I would bet on our own The Tim continuing to work hard and having eyes up to spot a safe landing lily pad at a right time.

    It is tough in the market right now and I think it will be for another 2-3 years, and I wish “good fortune” to all who need it.
    Unless you are Ray who has lots of cash!!

    JK, Ray! Best to you as well. I hope you do have lots of cash and can invest well.

  75. 75
    David Losh says:

    RE: Haybaler @ 71

    I had a similar arrangement. It was 3% to buy, and 1% if you used me to list the property. I quickly learned that listings could be hard to do.

    You are also talking about a time when the Multiple was small. There was no Multiple Listing Service in many areas. You just went out and did deals. A lot of Brokers had pocket listing.

    It was the Multiple Listing Services that “set” commissions, and the going rate was 7%. There again all commissions are negotiable.

    I worked mainly with investors. I could have charged the 3.5%, but that sounded weird. I could have rounded up to 4%, but people only heard the 3 part of 3.5%, which is why I stuck with 3%.

    So I think you’re right, and you do seem to be off the beaten path. Thanks for the recollections.

  76. 76
    Alex says:

    You really need to take inflation into consideration. You can’t really compare the 1992-1996 dollars to the 2010-2011 dollars.

  77. 77

    By ARDELL @ 72:

    RE: Haybaler @ 66

    Just for perspective, I got my first job at the bank in 1972 with an annual starting salary of $4,800. My first annual raise in 1973 took me up to $5,200…and I was making the same as my Dad. I think going back to the 70s as to RE Commissions and trying to compare to today is a bit of a stretch, guys. :)

    I think your numbers may be low, or you were part-time.

    My first high school job was a union job at “Prairie Market.” $3.00 an hour, and that was a lot more than most others in school were making, but the low end for grocery store work (except baggers were getting less). That was 1974. If that had been full time that would have been $6,000 a year, but if it had been full time they would have had to pay more than $3.00 an hour. That pay classification was for under 24 hours a week.

  78. 78
    ARDELL says:

    RE: Kary L. Krismer @ 77

    It was full time, Kary. $4,800 a year.in 1972. $5,200 a year in 1973. In 1981 my husband’s first job out of college, before he got his Master’s Degree, was $17,000 a year at U.S. Steel. His undergraduate degree was in Computer Science. Average RE commission for both sides at that time was $5,000 per sale for both sides at 6%. Brokerages tended to sell their own listings more often back then.

    A new agent paying half to his broker on one side had to sell 15 to 18 houses a year to make the equivalent salary of a new college graduate.

    Back to commissions being less than 6% for both sides. I asked my friend if she remembers commissions EVER being based on less than 6% total for both sides. Her response:

    “No — and I started in 1974 when the MLS system consisted of us calling a phone number each morning to get a recording of new listings. Then 3×5 MLS cards would be printed and delivered a week or so later.”

    She’s the only person whom I know personally (and is still living) who was in real estate…before mls “books”. :)

  79. 79
    ARDELL says:

    RE: Kary L. Krismer @ 77

    As to your High School job “at $3.00 an hour” in 1974, minimum wage at that time was $1.60 or $3,328 a year for a full time job.

    Minimum Wage History:

    http://www.infoplease.com/ipa/A0774473.html

    Minimum wage went up by almost 50% during the Jimmy Carter double digit inflation years. Compare that to only 21% increase for the entire period from 1991 to 2006.

  80. 80
    David Losh says:

    RE: ARDELL @ 78

    Still, the commission was 7%.

    I think what Haybaler is talking about are outlying areas where you went into a place like Ruth Realty and asked about properties. They had a three ring binder, like what Tim some times posts.

    The point that is very valid is you had to do a lot of transactions to make a living in the 1970s. Today an agent can do alright on 3 to 6 transactions a year, depending on the price.

    Geez in the 1980s you were expected to do 24 transactions a year to make a good living.

  81. 81
    ARDELL says:

    Back to my comment #78 and a new agent on a 50/50 split needing to sell 15 to 18 houses a year to equal the base starting salary of a college graduate back in 1981.

    Today’s average starting salary for a college graduate (liberal arts degree) is $36,000.

    http://money.cnn.com/2011/02/10/pf/college_graduates_salaries/index.htm

    Let’s go to median price in Pierce County to calculate a 50/50 split on one side today. Median sold price $185,000. Median Commission for one side $5,550. 50/50 split of new agent $2,775.

    College graduate starting salary of $3,600 divided by $2,775 per sale = 13 houses sold to equal the starting salary of a college grad vs 15 to 18 houses in 1981.

    I wouldn’t call that a significant change over a 30 year period. Commission issues are only OMG in areas where median price is higher than the Country’s norm.

    That is why Redfin opened in “select” markets, most if not all of which were in areas where the median sold price was higher.

    When you consider the commission price at which brokerages can survive long term, you can’t look at Redfin as the model for that lower amount being sustainable, because they only open in “select markets”. The industry as a whole cannot bypass lower priced housing, as that would be against the Federal mandate of no “redlining” to exclude cheaper neighborhoods. Apparently Redfin gets a pass on that one too.

    If everyone followed the Redfin model as to commissions charged and only having offices in “select areas”, there would be many areas with no agents to assist them in buying and selling real estate. So much for the DOJ looking out for the people of this Country.

  82. 82

    By ARDELL @ 79:

    RE: Kary L. Krismer @ 77

    As to your High School job “at $3.00 an hour” in 1974, minimum wage at that time was $1.60 or $3,328 a year for a full time job.

    Minimum Wage History:

    http://www.infoplease.com/ipa/A0774473.html

    Yes, like I said, it was significantly more than others in my school were earning (ignoring those who did the same job at other stores).

    I don’t remember what the regular clerks topped out at, but I think it was about $6.00 an hour, or $12,000 a year if they got full time (not all did).

    I know banks have never paid well (they give titles in lieu of pay), but I had no idea it was that bad.

  83. 83
    ARDELL says:

    RE: David Losh @ 80

    David,

    The harsh reality of the real estate industry as a whole is that I paid more to a brokerage back in 1994 than most any agent pays to a broker today in 2012. THAT is the significant change for brokerages, without regard to the increase in home prices or the increase in the cost of living. Assuming the per agent “cap” is still at $30,000 to $35,000, that is lower than I paid ($40,000) to my brokerage in 1994.

    The national base for commissions has always been 6%, shifting to 5% or 7% in specific markets that were above or below the national median price. When I worked in Florida it was 7%. When I worked in Manhattan Beach CA it was 5%. Everyone working from 6%…give or take as market conditions in each area applied, for at least as far back as 1974.

    As you can see, my calculations at 6% compared to the starting salary of a college graduate, still equal roughly 15 houses a year on the same basis as 1981.

    As to the number of houses sold…I as a single practitioner back in 1994 or so could do about 36 a year without a personal staff. More “staff support” was provided by the brokerages back then than today. I was on a 65/35 split. That was pretty much the national statistic for agents then 24-36 without a “team” or full time “staff”, some seasonal part time support staff.

    Once agents started to demand high splits, they also had to hire more personal support staff or sell fewer homes. The “desk fee” concept is based on virtually no support from the office…and often no real “desk”. No brokerage paying for your signs and lockboxes or “ads”, etc.

    Taking two of the largest teams in King County with more than one agent to sustain plus salaried staff, the TOP average for 2011 is 44 houses. (not using short sale “specialists” as the example)

    That puts the TOP full team average today at only 8 houses more than I could personally handle myself back in 1994, with no staff to pay and no agent to split with by design.

    “Cost of Living” is of no never mind, as the cost of doing business, especially for teams and the brokerage model, has influenced the real estate industry more than a cost of living factor. The changes in how agents and brokerages do business from 1990 to present is more dramatic than the cost of living “issue”.

  84. 84
    ARDELL says:

    Cost of Living…for agents…is controlled by the price of homes. Where the cost of living is lower, the average commission is lower because the cost of housing is lower. Where the cost of living is higher, the average commission per home sold is higher, given the payment is based largely on home price.

    Home Prices adjust for “cost of living” from one area to the next, so there is no need to apply a cost of living factor per area over time. The market does that all on its own.

  85. 85
    ARDELL says:

    RE: Kary L. Krismer @ 82

    The old saying was “Banks pay less…BUT they have GREAT benefits!”. By 1985 or so I had more paid holidays than most jobs, 5 weeks paid vacation, full free health benefits for my entire family, life insurance, disability insurance, profit sharing…on and on and on. I still have a certificate for 1,000 shares of “Grant Street Bank”. I’m pretty sure it’s worth nothing…but I keep it just in case. :) I think that was supposed to be a subsidiary of Girard Bank and we all got 1000 shares instead of a raise one year…and a very nice new typewriter from IBM to work on. :)

  86. 86
    ARDELL says:

    RE: David Losh @ 80

    ” Today an agent can do alright on 3 to 6 transactions a year, depending on the price.”

    Really? Define “do alright” and “depending on price”. That doesn’t look right to me.

  87. 87
    RT says:

    There is a lot of hyperbole used in these posts, I am curious of the average gross income of the average realtor on the eastside? Not the average commission, or split. What is an average realtor really making in gross income after the brokerage split, $50k, $100k, $150? how does this figure compare to the eastside average income (or Seattle, or south end, etc.)?

  88. 88
    David Losh says:

    RE: ARDELL @ 86

    Sorry Ardell, but a $600K house at 3% is $18K for a commission. A home alone program at Windermere can be between $900, and $1400 a month. One transaction wipes out the desk fee.

    Coldwell Banker Danforth is something like $325 a month, plus Realtor dues.

    So three transactions at $600K minus the upper end desk fee is $37200 per year. That ties to your “Today’s average starting salary for a college graduate (liberal arts degree) is $36,000.”

    At six transactions it’s $91200 per year.

    If you want to double the amounts to get in the $300K range for home sales, great. That’s six to twelve transactions.

    Now a team here in Seattle can do 120 transactions. They can only do 10 transactions a month. The team consists of a buyer’s agent, a listing agent, a secratary, and transaction coordinator. That is a million dollars worth of commissions a year.

    I don’t know what they do today, but there is good money in Real Estate commissions.

  89. 89
    ARDELL says:

    RE: David Losh @ 88

    “Now a team here in Seattle can do 120 transactions.”

    Show me a team that is doing 120 transactions…not counting Hellickson of course. :) I see a few crap factories spitting out $40,000 and $50,000 transactions like old chewing gum. 80 or so and a median price of $180,000. But I don’t seen any teams doing 120 at a median sold price of $600,000. Do you?

  90. 90
    ARDELL says:

    RE: RT @ 87

    What is the Eastside Average income?

  91. 91
    RT says:

    RE: ARDELL @ 90

    Good question, I will try to nail it down. For the sake of this conversation here is the median (sorry, not average) for Bellevue in 2009.

    Median household income in 2009 for:
    White non-Hispanic householders: $83,949
    Black householders: $50,124
    American Indian and Alaska Native householders: $47,579
    Asian householders: $90,221
    Native Hawaiian and other Pacific Islander householders: $65,902
    Some other race householders: $50,449
    Two or more races householders: $98,839
    Hispanic or Latino race householders: $61,921

    So……How does this compare to the median realtor in Bellevue Ardell?

  92. 92
    David Losh says:

    RE: ARDELL @ 89

    Well, of course you are right, they have only done $351K in gross commissions in the past 6 months. I would imagine this selling season will be pretty good.

    I based 120 transactions on a average transaction of $300K at 3% commissions, that’s what came up to a million.

    So they will gross, I expect, $700K this year rather than a million.

  93. 93
    ARDELL says:

    RE: David Losh @ 92

    Who is “they”? Email that to me. I don’t see anyone with 120 at $300k avg. We can’t say publicly, but I checked several I thought would be top and those with higher sold prices only did 33 to 44 and those with really low numbers did 80. If there are 3 agents and 2 staff people on the team, that doesn’t break down into more than average per person.

  94. 94
    ARDELL says:

    RE: RT @ 91

    It is the doable goal of any agent to gross $100,000. We don’t really look at “average” as there are too many people with licenses that sell 1 or 2 or no houses at all. When you divide the commissions by the # of agents it looks like the average is $17,000, but that includes lots and lots of people with licenses who are not working, or who are licensed assistants.

    Without regard to race, since race is not something agents can talk about at all, the average is in the $60,000 to $100,000 range, same as your average income noted for other fields. There is no published data for that. We can access it and make assumptions, as David noted, but the information is not publicly available. We pretty much spot check the people we know, and we know most agents who are actually working.

    Historically the ones who are working represent about 20% of all licensees.

  95. 95

    By ARDELL @ 94:

    RE: RT @ 91 – It is the doable goal of any agent to gross $100,000. We don’t really look at “average” as there are too many people with licenses that sell 1 or 2 or no houses at all. .

    The median income could very well be zero!

  96. 96

    […] request of ChrisM and Alex, I ran the commission numbers I posted Friday through an inflation-adjustment. The chart […]

  97. 97
    David Losh says:

    RE: ARDELL @ 94RE: ARDELL @ 93

    Your argument seems to be circular. You, as an individual, way back when, could do 36 transactions by yourself, but today a team can only do 44.

    With the higher prices today that commission dollar adds up to be a lot more than way back when.

    The way it looks to me is 36 transactions way back when came out to $108K per year? and 44 today is $396K?

    I can’t tell if you are saying Real Estate agents make too much, or too little. I personally think Real Estate agents run a small business and it’s a lot of work to stay competitive today.

  98. 98
    RT says:

    RE: ARDELL @ 94

    Not bad in a tough economy. Thanks fr the reply Ardell!

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