Real estate commissions: Where are they now?

The average total commission for real estate transactions dropped from about 6.1 percent in 1991 to about 5.18 percent in 2006, according to Real Trends, a real estate research and information company.

And while the obvious trend is that commissions have been on the decline, the market was in a steep ascent in housing sales and prices for much of that period -- so commission dollars per transaction actually have increased despite the percentage drop.

Real Trends won't release commission data for 2007 until May. But Real Trends has reported that the commission rate actually increased from 5.02 percent in 2005 to 5.18 percent in 2006. Can this upward trend be expected to continue in this down market?

What's your bet about where the average commission rate stands today, and where it's heading? What is going on in your market area?

In financial documents released this year, real estate brokerage and franchise company Realogy reports that the average home-sale commission rate for its franchisees was 2.65 percent in 2002, and that rate declined to 2.47 percent in 2006 and 2.49 percent for the first nine months of 2007.

This commission rate represents half of a total commission in a real estate transaction, as the commission is typically divided for agents representing the buy side of the transaction and the sell side of the transaction.

So these numbers would translate to a 5.3 percent total commission in 2002, a 4.94 percent total commission in 2006, and a 4.98 percent total commission in the first nine months of 2007. And Realogy's company-owned brokerage offices reported an average home-sale commission rate of 2.63 percent in 2002, 2.48 percent in 2006 and 2.47 percent for the first nine months in 2007 -- or a total average commission of 5.26 percent in 2002, 4.96 percent in 2006 and 4.94 percent in 2007.

Realogy has about 15,000 franchise offices and 1,000 company-owned brokerage offices and 314,000 sales associates, and its sales associates participate in about 25 percent of all single-family domestic home-sale transactions involving a broker.

The U.S. Justice Department, at a Web site that focuses on real estate competition, estimates that the median real estate commission rate paid by consumers rose from about $9,110 in 2001 to $11,672, and was projected to decline in 2007 if the commission rate remained level with the 2006 commission rate.

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