A Jan. 28 report in The Denver Post newspaper credits Dave Liniger, chairman and co-founder of real estate industry powerhouse RE/MAX International, with a prediction that average real estate commissions will drop to about 4 percent in the next five years. But Liniger told Inman News that wasn’t a correct characterization of what he said.

Instead, Liniger said this week that his comments related to the declining share of real estate commissions that agents are experiencing — and not a declining cost to consumers. There are many companies that have sought to play a role in real estate transactions for a share of the commission revenue, and these businesses are having an impact on the compensation to agents who are directly involved in home sales, he said.

Sales commissions, he said, are “getting split a lot of ways.” Industry research firm Real Trends noted that average real estate commissions have slipped from an average of 6 percent to the low 5 percent range for the past few years. A real estate agent who lists a property for sale traditionally is paid a percentage of the home’s selling price, and the listing agent typically offers roughly half of that commission to an agent who brings a buyer into the transaction.

Some real estate lead-generation companies charge a fixed fee or a percentage of a real estate commission for connecting consumers with real estate agents.

If agents are paying a 35 percent fee to a third-party who referred a consumer to work with them, that could mean a 4 percent total commission rather than a 6 percent total commission for a real estate transaction, Liniger said. “It’s ridiculous to give all of those referrals out,” he said.

RE/MAX International, based in Denver, has offices in 62 countries. In 2005, the company had a net gain of 15,900 agents, Liniger reported.

***

Send tips or a Letter to the Editor to glenn@inman.com or call (510) 658-9252, ext. 137.

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