A consumer survey released today revealed that most respondents believe a 5 percent to 6 percent commission paid to real estate professionals for the sale of a $300,000 home is too high; 41 percent believe the real estate industry or its agents set the commission rate; and 13 percent believe commissions are set by state law.
The report, by the Consumer Federation of America, a research and advocacy organization that promotes pro-consumer policy on a variety of issues, is based on an analysis of June 2006 survey data collected by survey firm Opinion Research Corp. for the American Association of Retired Persons. The survey included 2,036 participants, of which about 28 percent used the services of a real estate agent or broker in the past five years.
The Consumer Federation has released several reports in the past year related to the real estate industry, including a December report on the growth of nontraditional real estate brokers and challenges that they face, a July report that called for more independence among real estate regulatory agencies, and a June 2006 report that charged that traditional real estate brokers “act as a price-setting cartel” when it comes to real estate commission rates.
According to the group’s latest report, 36 percent of survey participants said they know “a lot” or “a fair amount” about real estate agents and brokers and the services they offer, while 34 percent responded that multiple listing services are the most complete source of information about homes for sale and 26 percent said real estate commissions can be negotiated.
Among the respondents who worked with an agent or brokers in the past five years, 58 percent said they were knowledgeable about industry professionals and their services; 38 percent knew that state commissions regulate the industry; 73 percent said they view agent and brokers’ consumer practices favorably; and 84 percent said they viewed their own agent or broker favorably.
That compares with 68 percent of all respondents who said they have a favorable view real estate agents’ and brokers’ consumer practices.
Meanwhile, a separate survey by Harris Interactive found that real estate agents and brokers ranked among the least prestigious jobs. That poll, released in July 2006, found that 32 percent of respondents found that the occupation of real estate agent and broker had “hardly any prestige at all,” while 6 percent of respondents said that the occupation had “very great” prestige. The occupations of firefighter, doctor and nurse earned top rankings for prestige.
While real estate industry trade groups in some states have backed state laws and regulations that require all real estate licensees to perform a specific minimum range of services for consumers, the survey report by the Consumer Federation noted that 60 of consumers disapprove of these laws.
Also, 55 percent of consumers do not approve of the potential conflicts created when active real estate brokers serve on state real estate regulatory commissions, while 57 percent said they would approve of consumers serving on real estate commissions, and about 42 percent disapprove of state laws that prohibit real estate agents from offering rebates to home buyers.
About 63 percent of survey participants said that buyer access to the local MLS should be fee-based and should not require an exclusive agreement with a broker. Most participants said the most useful services that agents and brokers offer include helping buyers visit homes, closing the sale, and listing homes and helping buyers search listings.
Fifty-two percent of respondents said that a dual agent, who is an agent that represents both the buyer and seller in the same real estate transaction, “cannot effectively represent (the) financial interests of buyers and sellers.”
About 32 percent of participants said that typical real estate commissions range from 5 percent to 6 percent of a home’s selling price while 22 percent said commissions over 6 percent are typical. When asked how the real estate industry is regulated, 30 percent said it is regulated by state real estate commissions, 19 percent said other government agencies, 11 percent said the industry is self-regulated, and 19 percent said the industry is not regulated.
And 49 percent of survey respondents said they disapprove of state laws that require out-of-state, Internet-based real estate services to maintain an in-state office, while that increased to 54 percent among those respondents who had had worked with a real estate agent or broker within the past five years.