Brokers typically charge a commission based on a percentage of the home's sale price. Over the past decade the average commission rate has remained relatively steady between 5.0 and 5.5 percent. As a result, the actual median commission paid by consumers rose sharply along with the run-up in home prices.
Unless broker costs were also rising sharply during this period of time, competition among brokers should have held commissions in check even as home prices were rising.
Notes on Charts
Median Commissions Paid by Consumers, 1999-2009
- Inflation-adjusted median commission fees are calculated by multiplying commission rates (from REAL Trends 500©) by inflation-adjusted median home prices.
Median Home Sales Prices, 1999-2009
- Median home prices are from “U.S. Housing Market Conditions,” U.S. Department of Housing and Urban Development. Home prices are a weighted average of new and existing home prices, based on annual sales.
- Median home prices are converted into 2009 dollars with the consumer price index for all goods for urban consumers (CPI-U) from the U.S. Bureau of Labor Statistics.