In the ongoing Sitzer/Burnett buyer-broker commissions trial, the defense recently concluded much of its case, with key testimonies from Keller Williams (KW) Co-founder Gary Keller and President Marc King. Both leaders vehemently denied any conspiracy regarding commission rates, challenging the notion of a “standard 6% commission.” This article delves into the details of their testimonies and what it could mean for the real estate industry.
Tag: Standard 6% commission
THERE IS NO STANDARD 6% COMMISSION
The notion that there is a standard 6% commission for real estate transactions is a common misconception. In reality, real estate commissions are negotiable and can vary based on several factors.
Variability in Commission Rates: Real estate commissions can fluctuate based on the location, property type, and the sale price of the property. For instance, a survey of Virginia agents found that the average real estate commission was 5.22%, which is less than the national average of 5.37% source. Similarly, commissions for selling vacant land can range from 10% to 20% source.
Negotiable Commissions: Commissions are not fixed and can be negotiated between the seller and the agent. While some agents may propose a 6% commission, others may be willing to accept a lower rate. A report by Bankrate mentions that commissions typically run about 5% to 6% of a home’s sale price, indicating flexibility in the rates.
Diverse Business Models: Different real estate brokerages may have varying business models and commission structures. Some may offer discounted rates or flat fees for their services, providing sellers with alternatives to the traditional percentage-based commission.
Consumer Awareness: With increased access to information, sellers are becoming more aware of their options and may negotiate for lower commissions. Platforms like Redfin provide information on how commission costs break down, empowering sellers to make informed decisions.
While 6% may be a commonly cited figure, there is no standard commission rate in the real estate industry. Commissions are subject to negotiation and can vary based on multiple factors, providing flexibility to both agents and sellers.