According to NAR, Discussing Commissions is an Anti-Trust Violation

As real estate agents, we are trained, time after time, not to discuss commissions.  We are told that it is an anti-trust violation to so much as share what commissions we charge.  We are told that it is an anti-trust violation to even discuss commissions.

This isn’t true.  It is an anti-trust violation to fix commissions, to agree to set commissions at a certain price.  In fact, the idea that discussing commissions is an anti-trust violation goes against a lot of the advertising we see.  In California, real estate agents are allowed to advertise the commission they will charge.  If the agent is advertising a 1% seller’s commission, if you’re an agent, you know there is a buyer’s agents’ commission that will need to be paid also.  Agents who consistently say that they only charge 1% can do so.  In other words, marketing the rate you charge is okay.  However, colluding with other agents is not.

Then why does NAR make such a big deal about keeping commission rates confidential?  Could it be that the rates we all believe everyone else is charging, aren’t the rates being charged at all?  Could it be that it is impossible to determine someone’s salary by the commission since many agents include certain services in with a full (6%) commission?  Could it be that NAR really doesn’t want to know what is happening with the commissions and they encourage us not to ask as well?

Many trade associations take surveys to determine how much people in a particular line of work make.  These are very common.  In fact, there is even a website called Payscale.com that will report on just about any business. It will even give you the results of a salary survey on Realtors.  (By the way, we should all move to Michigan.  The salary there was $99,754!)  Of course, there weren’t that many responses.  (Only four for Michigan.)  Probably a side effect of NAR trying convincing agents to keep commissions quiet and by proxy income.  Possibly the result of the lack of satisfaction most of us feel in the income we generate as real estate agents.

Maybe it does all come down to NAR wanting to keep real estate agents’ salaries a secret.  If people knew how hard it was and how little new agents made, then they might not pay their due for that first trying year.   Of course, the concept that selling real estate is a way to get rich quick, when in reality real estate agents make less than $40,000 per year in their first few years in business, would be questioned if income information were more freely available.

This is just another instance of the lack of transparency in the business.  Real estate agents hide their experience, hide their income and hide their pricing.  If you knew that an agent with one year or less of experience charged 2% and an agent with twenty years of experience would charge 3.5%, then clients could decide who to work with  based on an agent’s  experience and pricing.

I am currently trying to take a survey of real estate agents.  My survey includes questions about commissions.  Some agents answer them without blinking others balk at the idea.  It really is a question of the interpretation and belief of the agent.

We need to unlock the locks, let the information out.  Other agents should know what other agents are charging.  If the competition is really there, disclosing this information won’t reduce competition, it will help it.  Agents should also be advertising what is included in the commission rate.  Without this information, clients remain unaware of the different business plans that real estate agents have.

By discouraging agents from advertising commissions, NAR in effect is controlling commissions.  Without the information, most agents simply stick to what they know is out there.  The typical 6% commission.

© 2007 by Judy Kane