Broker commissions on U.S. home sales dropped 18 percent last year as purchases of foreclosed properties and the recession slashed values, according to ForSaleByOwner.com.
Total commissions were $46.6 billion in 2008, the lowest since 2002 and 34 percent below the peak of $71 billion in 2005, the New York-based online real estate service said in a statement today. The average commission paid on a brokered sale last year was $12,600.
“The cost of paying real estate commissions has clearly been magnified by declining home values,” Greg Healy, vice president of operations at ForSaleByOwner, said in the statement.
Prices in 20 U.S. cities fell 18.5 percent in December from a year earlier, the fastest drop on record, according to the S&P/Case-Shiller index. Sales of previously owned homes, which account for about 90 percent of the market, fell in January to the lowest since 1997, and new-home purchases plunged to the lowest since records began in 1963, the National Association of Realtors and Commerce Department said.
U.S. foreclosure filings exceeded 250,000 for the 10th straight month in January, RealtyTrac Inc. reported, and nonfarm payrolls plunged by 651,000, pushing the unemployment rate to the highest since 1992, according to the Labor Department.
Homeowners in the U.S. West paid the highest commission to sell their property at an average $16,230, according to ForSaleByOwner. Sellers paid $15,500 in the Northeast, $11,050 in the South and $9,540 in the Midwest.
ForSaleByOwner obtained its estimates using the $243,100 average 2008 home sale price from the Chicago-based National Association of Realtors and a 5.2 percent average commission estimated by REAL Trends Inc., a Castle Rock, Colorado-based property research firm, said company spokesman Eric Mangan.
About 75 percent of the 4.9 million U.S. home sales last year were sold through full-service brokerages, Mangan said, citing data from REAL Trends and the Realtors group.
ForSaleByOwner was founded in 1999 and acquired by Chicago- based Tribune Co. in 2006. It helps property owners market their homes without using a broker. It had more than 2 million unique average visitors in 2008, Mangan said.