Why have real estate commissions remained at such an inflated rate for so many years?
As home prices have skyrocked, this remains a disturbing question. Here are some of the key reasons; Independent Contractors – Almost all agents are independent contractors. Even though they may represent a well-known firm (which are primarily franchises), in actuality, they work for themselves (even at times vigorously competing for clients within their own firms!). As a result, many agents must pay for home advertising and other expenses out of their own pocket. Agents do not want to risk the personal funds needed to market a home unless a very high commission can be earned. Very low industry productivity in this system is a huge problem (1.2 million agents for 6 million US sales per year). Additionally many of these independent contractors must pay steep fees to their franchise owner on a monthly basis. The franchise owner and his management team essentially become realtor landlords instead of residential real estate specialists. Agents in these offices are charged on a monthly basi
