Online Trends May Cut Real Estate Agent Commissions

As more home-selling data and tools go online to website such as zillow and trulia, long-held real estate power and commission structures are being tested.

Third party aggregators, online websites that give out information on homes that are for sale have been bought recently are challenging the conservative ideas of real estate agencies, affecting the way agents get commission based on their work to help people find their first or subsequent dream home.

“There’s definitely a growing feeling among agents and brokers that they don’t need that brand affiliation anymore or they’re not willing to pay for that brand affiliation,” said Rick Sharga, executive vice president at Auction.com.

Other real estate experts are predicting the same change, but some say the traditional commission structure for residential deals, which accounts for about six percent of the selling price, split equally between the agents representing the buyer and seller, has historically been change resistant, and may not change that much, even with websites like Zillow and Trulia.

“Commission pricing has been amazingly resilient to any shift we’ve seen in the industry so far,” said Chad Syverson, J. Baum Harris professor of economics at the University of Chicago Booth School of Management.

Still, new homeowners are looking to thirds parties to help represent them when going to look at a property or making an offer. For some newer pricing models, real estate agents have worked to stop those parties from unbundling their agent services and pricing them separately for clients who don’t need help with financing, because they have an advisor or already know the information, or already understand extensive property searches.

However, Coldwell Banker CEO Budge Huskey counters that unbundling has been available for “quite some time, but the vast majority of consumers don’t unbundle the experience” of buying or selling a home.

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