Has anyone else noticed a nasty little trend emerging in their markets recently?  I have not had much experience in different types of markets – only licensed since 2004 – but one thing has been bugging me.  In the New River Valley, in 2004 – 2006, we had a really hot market and properties were moving … in 2007 it stabilized a bit, and 2008 has seen the same except in some areas.  But one thing has continued to move, and in the wrong direction.

Commissions paid.

What gives?  I’ve been feeling it in my gut for a while, and my year-end totals bear it out – year over year, the total brokerage fee I’ve received has gone down.  Last year was my best year ever in real estate, and the brokerage fee received was the lowest.  2.2%.  GULP.  I did a random sampling of twenty homes currently listed in our MLS this morning and found that of those twenty, 14 were offering 2.5% to the buyer’s agent and 6 were offering 3%.  Compare that to 2004, when, of twenty homes sampled, 12 were offering 3% to the buyer’s agent, 7 were offering 2.5%, and one was offering 2%.  I bet if we sampled every brokerage in the NRVMLS we’d find a similar trend as what I’m reporting here, and I’m wondering what people are seeing in their own markets.

The logic here seems skewed.  In a hot market, it seems sellers would be negotiating lower rates because – in part – properties would sell faster on average, and in slower markets the fees paid might be higher.
Anytime a commission is cut in order to win a listing, I as a buyer’s agent have my income reduced when I had nothing to do with the cut.  Yes – I can have a buyer sign an Exclusive Right to Represent – but I don’t offer that and so any commission that’s cut affects my bottom line.

Any thoughts on what we’re seeing?  It’s a disappointing trend, because there are many markets in Virginia where property values are falling … if others are seeing this as well, in falling markets, then some of these agents have to be gasping for air.  Are we just not defending our value to clients?  Are more and more vendors and referral companies holding their hands out (yes and yes, IMO).  Your thoughts?  What are you seeing in your market?

[Blogmaster's note: While we encourage a free exchange of views, just a reminder to readers that commissions are set by brokers and fully negotiable.]