Broker commissions could surge 16% this year
Agents are pulling in bigger fees from more expensive deals
A red hot housing market means a big year for brokers.
Commission revenue — the cut agents get for buying or selling homes — is likely to jump 16 percent in 2021, an analysis by the proptech Knock found and Bloomberg News reported.
Brokers are making more in part because deals are getting more expensive. U.S. home prices surged 14 percent in April, smashing another record to hit a 30-year high, on the latest S&P CoreLogic Case-Shiller index.
That surge means brokers could pull in over $100 billion for the first time, Bloomberg reported.
The expected increase comes despite brokers charging their customers less on a percentage basis. The average commission rate for the year is anticipated to hit just 4.94 percent, lower than last year’s and 20 basis points below what it was 20 years ago.
It also does not necessarily mean that the majority of agents will make more money. Inventory has been low and more people are getting real estate licenses than failing to renew them, to the point where there are more agents than homes for sale.
The revenue model for real estate agents hasn’t gone without criticism. The U.S. Justice Department recently pulled out of an antitrust settlement that had been reached with the National Association of Realtors during the Trump administration, in order to probe the organization, Bloomberg reported.
[Bloomberg] — Suzannah Cavanaugh