Industry officials decry commission-sharing scrutiny

She further outlined what might occur should a percentage limit be placed on commission-sharing: “If the commission is relegated to a maximum 4%, for example, the industry will lose realtors and we might see commission plus broker fee plus advertising costs in the agreements.  However, the Realtors that remain will make it work.”

Yet the thorny issue of remuneration remains: “There is a question of fair compensation.,” Ray said.  “Who decides? In the mortgage industry, we have a maximum that we can make, whether we like it or not. We also have costs associated with each transaction. Why is real estate any different? Many RE shops have a set fee that sales associates pay giving the majority of the commission to the agents. You will likely see more real estate agents going in that direction.”

The commission-sharing system benefits sellers and buyers understand the cost, Cunningham suggested: “Sellers continue to opt into the commission-sharing system as they feel it is the best way to accomplish their goals, sell their homes quickly, and have confidence that the transaction will be handled by professionals,” he said.

“The idea that this system is causing the increase in home prices is not necessarily true as the price is determined by buyers’ willingness to pay what the market demands, and buyers have continued to see the value of home ownership and have paid market price.”

Let the market decide, he reiterated: “Prices will not drop until buyers no longer see the value in buying homes at a given price,” he said. “This is starting to happen with mortgage interest rates in the 7s already.  The market will sort itself out. That is how a free market works – supply and demand.”

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