Ethical Homes

On our website and in our training materials, we often need to give examples of how the math involving commissions works; the examples that we use, however, should not be taken to imply any sort of industry standard in terms of commissions charged.

This is a serious issue, because many real estate and mortgage brokerages (wrongly) feel entitled to certain minimum commission levels, and have in the past attempted to collude to fix commissions in specific areas at specific levels. The government takes a dim view of this, thankfully, but in their zeal to prevent such collusion, they sometimes have been known to prosecute brokers and agents for simply mentioning current trends in local commission levels in the presence of other brokers, on the theory that doing so is an attempt to communicate to each other their desires for a specific target commission that all brokers will then charge.

We want consumers to be as informed as possible, but we also want to avoid being fined $1 million and going to jail for 3 years (the maximum penalty the government can impose for an anti-trust violation of this sort), so to be explicit: all commision numbers that we provide on our website and in our training materials are purely for educational purposes. We try to make those numbers correspond to the most common values that we are seeing in the market today, so that consumers can get a better idea of the actual numbers that they will see in their transactions, but again, these numbers are purely descriptive of the most common (mode or median) values that we are seeing, or in some cases rounded off versions of those numbers designed to make the relevant math more easily understood by consumers.

In general, then, the numbers that we tend to use in our examples are:

• Typical buyer agency commision: buyer pays buyer’s agent 3% of sales price
• Typical seller agency commision: seller pays seller’s agent 6% of sales price
• Typical seller agent cooperative commision: seller’s agent pays buyer’s agent 3% of sales price

Again, these numbers are purely for educational purposes and are intended to be descriptive of numbers that consumers will often find in the local DC marketplace; we ourselves often charge commissions and/or offer cooperative commisions that are higher or lower than these, so we fully support (and encourage) the right of other brokers to charge whatever commission they see fit.