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A Critical Assessment of the Traditional Residential Real Estate Broker Commission Rate Structure (Unabridged)

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dc.contributor.authorNadel, Mark S.
dc.date.accessioned2020-09-04T17:09:18Z
dc.date.available2020-09-04T17:09:18Z
dc.date.issued2007-05-01
dc.description.abstractWhile real estate brokers have long set their fee as a straight percentage of a home’s sale price, this formula is an anomaly and a primary reason why such fees may be inflated by more than $30 billion annually. Although competitive pressures ordinarily force an industry’s fee structure to reflect its costs, real estate broker commissions are strangely unrelated to either the quantity or quality of the service rendered or even to the value provided. Rather, this fee has been based solely on the price of the home. (It is as if tax preparers set their fee as a flat percentage of a client’s gross income, irrespective of how difficult the return was to prepare or how much their efforts saved the taxpayer). Oddly, not only is there no evidence that it is any more costly to sell higher-priced homes than median-priced properties, but it is possible that the opposite may be true! Furthermore, the straight percentage fee formula creates little incentive for real estate agents to provide home buyers or sellers with additional value.
dc.description.legacydownloads5_Nadel_2007_A_critical_assessment.pdf: 1653 downloads, before Aug. 1, 2020.
dc.identifier.other9747471
dc.identifier.urihttps://hdl.handle.net/1813/70631
dc.language.isoen_US
dc.relation.ispartofseriesCornell Real Estate Review
dc.rightsRequired Publisher Statement: © Cornell University. Reprinted with permission. All rights reserved.
dc.subjectCornell
dc.subjectresidential real estate
dc.subjectbroker fees
dc.subjectrate structure
dc.subjecthome buying
dc.subjectcommission
dc.subjectreal estate agent
dc.titleA Critical Assessment of the Traditional Residential Real Estate Broker Commission Rate Structure (Unabridged)
dc.typearticle
schema.issueNumberVol. 5

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CRER Vol. 05 (2007)