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Commissions on real estate deals should be more open, group says
Many home sellers do not know that 5-6 percent of the sale price goes toward the real estate agents' commission, according to a new survey.
The Consumer Federation of America said in its report, "Hidden Real Estate Commissions: Consumer Costs and Improved Transparency," that some agents and brokers make it difficult for consumers to learn about commission levels and that if they were made public, it would increase competition and could help to lower home prices.
"For most major consumer services, it is relatively easy for consumers to access information about prices," the group said. "This is not the case for an estimated $100 billion in real estate commissions that are charged home sellers each year."
The group said traditional firms and agents do not advertise their commissions, do not include information about their commissions on their websites, rarely mention on websites that commissions are charged, usually do not provide information about full commission levels during phone inquiries and do not, at first, provide information about commission levels with prospective home sellers.
“The reluctance of traditional real estate agents and firms to provide information about commission levels helps explain why there is so little price competition in the industry,” said Stephen Brobeck of the consumer firm.
The report also said that commission levels in most markets "are highly uniform."
The study suggests real estate commissions could become more transparent if, in initial interviews with listing agents, more home sellers asked about commission levels and the willingness of agents to negotiate them down; and, in initial interviews with buyer agents, if buyers asked about commission splits and whether they would be shown homes with relatively low splits.
“We believe that more visible pricing would not only lower costs for consumers but also increase consumer confidence in agents who play a critical role in most home sales," Brobeck said.
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A newly completed apartment complex near Summerville sold in late October for $66 million, or just over $200,000 a key. Around the corner, 345 units in a separate project begin construction.
By the numbers
9: Number of Subway restaurants throughout Charleston recently shuttered as part of a franchisee's bankruptcy filing.
3: Number of new internationally flavored dining options setting up across the Charleston region.
208: Number of apartments coming to a former mental hospital building on Bull Street in Columbia.
This week in real estate
+ Filling up: New tenants are lining up in the new 22 WestEdge office building set to be completed by year's end. The eight-story structure on the Charleston peninsula is about 65 percent leased.
+ Mall investment: An activist investor takes a stake in ownership of South Carolina malls, including one in Charleston. What does it mean for the shopping centers' future?
+ 'Outdoors is in': Built in 1938, now modern South of Broad home wins architecture award for historic preservation.
The sun rise over remnants of the Pon Pon Chapel of Ease in Jacksonboro near the Charleston-Colleton county line. The ruins are in a fragile state that caretakers are trying to preserve.
Tour of homes: The Charleston Symphony Orchestra Tour of Homes on Kiawah Island is today.(Saturday, Nov. 2) Click the link for tickets.
Looking to buy your first home?: Origin SC offers classes on home ownership, budgeting and related issues for those looking to own a home, starting Tuesday.
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