Real estate brokers ‘purposely’ hide commissions: study via YahooFinance
Realtors “purposely hide” their commission rates and the lack of transparency has stunted price competition, a consumer watchdog agency alleged in a new study.
The CFA examined hundreds of agencies to find out why only 32% of Americans, and only 44% of recent homebuyers, know that the average realtor’s commission is 5% to 6% of the home’s purchase price, according to the CFA. Brobeck noted that Pacific Northwest MLS now allows brokers to disclose commission splits on individual properties, and Redfin has also agreed to do so. A commission split occurs when there is a buyer and seller broker, forcing them to share the commission.
Movement to disclose commissionsStory continuesBrokerages were also hesitant to share commission prices over the phone, the study found. Less than a fourth of brokerages disclosed rates in response to general phone inquiries, according to the study. Almost all firms eventually disclosed the commission rate when they were pushed by the CFA, which posed as home sellers in a second round of calls for the study.
Brokers said that they provide information about compensation on closing sheets, managing expectations along the way. “We’re always honest about commissions, or they wouldn’t hire us. Clients need to know what the costs are... Transparency is a must,” said Freedman.
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