Real estate trends

Real estate trends is a generic term used to describe any consistent pattern or change in the general direction of the real estate industry which, over the course of time, causes a statistically noticeable change. This phenomenon can be a result of the economy, a change in mortgage rates, consumer speculations, or other fundamental and non-fundamental reasons.

Buyer agency growth

At one time, all real estate brokers and agents, or realtors, practiced "single agency", meaning they represented only the buyer or only the seller - and generally the seller. In the 1990s, the concept of buyer agency became popular, allowing a buyer to retain an agent who would represent the best interests of the buyer alone. A 2008 study by Consumer Reports indicates that prior to this development, a realtor was presumed by state law to be working for the seller. The same study shows that buyers using buyer agents obtained a savings of $5000 in the price of the home as compared to prices paid by unrepresented buyers. It remains true that an unrepresented real estate buyer can still call the sellers agent to arrange a showing of the property. In such cases, the buyer should be advised by Agency Disclosure Laws (a state law in every state in the U.S.) that any information obtained, as well as all conversations and negotiations undertaken, will be for the benefit of the seller.

Lower commission rates

Historical rates are presented in a report by the Government Accountability Office – Congress' investigative arm. A 2005 study of real estate commission rates, reported that realtors tended to charge, "about 5 percent to 7 percent of a property's selling price]..."

In a May of 2007, CBS News, "60 Minutes" television news magazine reported that competitive pressure resulting from a record number of licensed agents has driven down the average sales commission rates paid by sellers. The historical average for a seller to pay for the services of a full service brokerage was seven percent. The current average is reported to be roughly five percent (slightly higher or lower in some markets).

Agent/brokers relationships

Main article: Real estate broker/agent

Traditional real estate brokerages "split" commission with agents. Historically, most brokerages paid 50 percent commission to agents, and retained 50 percent for brokerage operation costs such as facilities, utilities, clerical staff, office machinery, yard signs and marketing. This arrangement was known as a 50/50 split. Under this arrangement, the brokerage paid almost all of the agent's costs. More successful agents might negotiate a higher percentage of the commission. With the introduction of the 100 percent commission plan models popularized by RE/MAX and Keller Williams Brokerages, other companies were forced to raise their commission splits to as high as 70/30 or even 90/10 or 100 percent. The first number represents the percent of commission retained by the agent. With high agent splits came a shifting of costs from brokerage to agent. Agents on higher splits tend to work from home or pay desk fees (monthly fees for the use of office space). Under these arrangements, agents often pay for their own phone and fax lines, office furniture, clerical assistance, signs, and advertising.

Marketing trends

Buyers used to drive neighborhoods and call agents when they found a house they want to see. Newspaper ads were a very large part of the marketing of a home for sale. Most ads were paid for by the real estate broker or agent who listed the property. The broker or agent would recoup expenses only if and when the house sold. Since the 1990s, buyers have relied more and more on Internet marketing, and less on print advertising. It is estimated that as many as 80 percent of buyers use the Internet to identify and screen homes during their search.

U.S. government involvement

The United States Department of Justice Antitrust Division announced the launch of a new website in October 2007 to "educate consumers and policymakers about the potential benefits that competition can bring to consumers of real estate brokerage services and the barriers that inhibit that competition." Among other findings, they report that certain new sales models can reduce consumer home sales costs "by thousands of dollars. For example, in states that allow open competition, some buyer's brokers rebate up to two-thirds of their commission to the customer, and some seller's brokers offer limited-service packages that let sellers list their homes on the local Multiple Listing Service (MLS) for as little as a few hundred dollars."

See also

• Independent contractor
• United States housing bubble
• Real Estate Transaction Specification (RETS)
• Reduced-commission MLS Listings
• Internet Data Exchange (IDX)
• Pocket listing (or exclusive listing)
• List of real estate topics

External links

• U.S. Department of Justice: Competition and Real Estate