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The Real Deal Los Angeles

SoCal resi brokerage commissions rose 68% since 2009

Top producers get greatest share and do most business, leaving smaller brokers in the dust: report

November 07, 2016 03:10PM

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The fi rms of Douglas Elliman’s Howard Lorber (left), The Agency’s Mauricio Umansky (middle) and Compass’ Robert Reffkin (right) have all poached top producers from other brokerages. (Illustration by Guy Parsons)

The fi rms of Douglas Elliman’s Howard Lorber (left), The Agency’s Mauricio Umansky (middle) and Compass’ Robert Reffkin (right) have all poached top producers from other brokerages. (Illustration by Guy Parsons)

Is the Southern California real estate industry in a commissions bubble?

Residential brokerages in the region have seen commissions rise by a whopping 68 percent since 2009. They amount to $2.8 billion so far this year compared with $1.7 billion at pre-recession levels, according to reports cited by the L.A. Daily News.

Top producers, who get both a greater share of commissions and a larger share of deals, tend to leave the more minor players will a smaller piece of the pie. Brokerages, too, are taking less home thanks to the commission increases.

“Brokerages used to think they were doing well if they retain 30 percent or 40 percent of gross revenues. Now with all the stuff we provide our brokers and our consumers, we would be lucky to get 20 percent or the high teens,” Jamie Duran, president of Coldwell Banker Residential Brokerage for Orange County, San Diego and the Coachella Valley told the LADN. “It’s insane. It’s gotten crazy on the expense side. Nobody is getting fat.”

Realtors are also expanding on the ground. Brokers in Southern California opened more than 1,000 offices between 2009 and 2014, Census data shows, and that’s not accounting for the number of agents working from home or a coffee shop.

In L.A. County, the number of offices rose by 21 percent in that period. [LADN]Cathaleen Chen

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