NEW YORK, Mar. 10, 2009 – Commissions paid to real estate agents and brokers totaled $46.6 billion in 2008 – a $12 billion decrease from 2007 levels — according to an analysis performed by ForSaleByOwner.com. The nationwide average commission paid on a home sold through a residential brokerage during 2008 was $12,600. Sellers in the West paid the most to get their homes sold ($16,230), followed by home sellers in the Northeast ($15,500), South ($11,050) and Midwest ($9,540).
“The cost of paying real estate commissions has clearly been magnified by declining home values,” said Greg Healy, Vice President of Operations at ForSaleByOwner.com. “With home prices falling across the country, losing another five-plus percent in the form of a real estate commission is simply a luxury that today’s sellers cannot afford.”
“The National Association of Realtors recently found that people who sell their home themselves sell quicker and for closer to asking price than agent-assisted sellers. Agents do provide some convenience but, with commissions averaging $12,600, selling ‘by owner’ is a much more cost effective approach to getting a home sold,” added Healy.
Table 1: U.S. Annual Figures of Commissions Paid to Real Estate Agents & Brokers
2000 5,174,000 3,880,500 $178,500 5.42 %
2001 5,336,000 4,002,000 $188,300 5.12 % $9,640$38.6 Billion
2002 5,631,000 4,223,250 $206,100 5.14 % $10,600$44.8 Billion 2003 6,178,000 4,633,500 $222,200 5.12 %
$11,370$52.7 Billion 2004 6,778,000 5,083,500 $244,400 5.08 % $12,400$63.0 Billion
2005 7,076,000 5,307,000 $266,600 5.02 %
$13,380$71.0 Billion 2006 6,478,000 4,858,500 $268,200 5.18 %
2007 5,652,000 4,239,000 $266,000 5.18 %
2008 4,912,000 3,684,000 $243,100 5.20 %
Table 2: 2008 Average Sales Price & Commission Paid By Region
Northeast $297,900 $15,500 Midwest $183,400 $9,540 South $212,400 $11,050 West $312,100 $16,230
Keys for the Above Tables:
(*) Full-service brokers have an approximate 75% market share of all homes sold
(+) Source is National Association of Realtors
(#) Source is Real Trends
(^) Calculation performed by ForSaleByOwner.com
A recent survey from the National Association of Realtors found that people who sell “by owner” get closer to their asking price and sell quicker compared to those who sell through an agent. The trade association found that those who sell without an agent receive 97 price of their asking price, while those who sell with an agent receive 96 percent of their asking price. The trade association also found that a home sold through an agent takes 10 weeks, while it takes just six weeks to sell a home “by owner.”
In addition, separate studies from Northwestern University and Stanford University found that FSBO sellers are as effective as agents in maximizing the sales price of their homes. After commissions are factored into equation, the studies reported, sellers who sell “by owner” actually save more money, and retain more equity, than sellers who sell through agents. The September 2008 issue of Consumer Reports magazine also reported that FSBO sellers are more likely to get their asking price while agents deliver, on average, a sales price that is $5,000 less than the original asking price.
ForSaleByOwner.com is the nation’s leading “by owner” real estate website. Since 1999, ForSaleByOwner.com has saved home sellers more than one billion dollars by providing premium Internet marketing services, MLS listing services, property pricing reports, real estate guidance and information, downloadable legal forms, as well as live customer support, to help customers independently sell their own homes. The company charges a modest fee for its wide range of advertising and real estate resources, priced from $89 to $899. In contrast, a person selling a $300,000 home through a real estate agent would be charged a 6% commission fee and pay approximately $18,000. Prospective homebuyers can browse property database, available at http://www.forsalebyowner.com, at no charge.
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