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International Residential Real Estate Brokerage Fees and Implications for the US Brokerage Industry

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Abstract

It is commonly understood that residential real estate brokerage fees in the US tend to run 6% or 7% within local markets for existing property resales. Exceptions to these historically uniform going rates are starting to appear, and utilization of the internet will provide new efficiencies that should lead to lower commission rates in the future. One possible indication of where the long term commission rates may head, should price competition increase, is provided by a review of commission rates around the world. This study is a first attempt to gather such data and begin the process of global comparisons.Most industrialized country brokerage rates are significantly below those of the US, although there are clearly differences in the services provided, red tape, and liabilities, as well as information access. An exploratory model attempts to explain variations in fees around the world and deepen our understanding of possible equilibriums for US firms should price competition increase.

Suggested Citation

  • Natalya Delcoure & Norm G. Miller, 2002. "International Residential Real Estate Brokerage Fees and Implications for the US Brokerage Industry," International Real Estate Review, Global Social Science Institute, vol. 5(1), pages 12-39.
    • Handle: RePEc:ire:issued:v:05:n:01:2002:p:12-39
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    Citations

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    Cited by:

    1. Greg Kaplan & Kurt Mitman & Giovanni L. Violante, 2020. "The Housing Boom and Bust: Model Meets Evidence," Journal of Political Economy, University of Chicago Press, vol. 128(9), pages 3285-3345.
    2. Mayer, Chris & Piskorski, Tomasz & Tchistyi, Alexei, 2013. "The inefficiency of refinancing: Why prepayment penalties are good for risky borrowers," Journal of Financial Economics, Elsevier, vol. 107(3), pages 694-714.
    3. Panle Jia Barwick & Parag A. Pathak & Maisy Wong, 2015. "Conflicts of Interest and the Realtor Commission Puzzle," NBER Working Papers 21489, National Bureau of Economic Research, Inc.
    4. Huh, Sungjun & Kim, Insu, 2021. "Real estate and relative risk aversion with generalized recursive preferences," Journal of Macroeconomics, Elsevier, vol. 68(C).
    5. Panle Jia Barwick & Parag A. Pathak & Maisy Wong, 2017. "Conflicts of Interest and Steering in Residential Brokerage," American Economic Journal: Applied Economics, American Economic Association, vol. 9(3), pages 191-222, July.
    6. Soyoung Lee, 2023. "The Macroeconomic Effects of Debt Relief Policies During Recessions," Staff Working Papers 23-48, Bank of Canada.
    7. Beck, Jason & Scott, Frank & Yelowitz, Aaron, 2010. "Competition and market structure in local real estate markets," MPRA Paper 27531, University Library of Munich, Germany.
    8. Steegmans, Joep & Hassink, Wolter, 2017. "Financial position and house price determination: An empirical study of income and wealth effects," Journal of Housing Economics, Elsevier, vol. 36(C), pages 8-24.
    9. Prince Christian R. Cruz, 2008. "Transaction Costs and Housing Affordability in Asia," International Real Estate Review, Global Social Science Institute, vol. 11(1), pages 128-150.

    More about this item

    Keywords

    Brokerage; Commissions; International; Internet; Future;
    All these keywords.

    JEL classification:

    • L85 - Industrial Organization - - Industry Studies: Services - - - Real Estate Services

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