Over the last decade, a number of technological innovations and new business models in the U.S. residential real estate industry — from instant buying programs to virtual tours and digital closings — have made it easier to match buyers with homes and lowered the cost of housing transactions. However, puzzlingly, these technological advances have not lowered the cost of services by the real estate brokerage industry. In fact, across the country, national average commission fees over the past couple of decades have doubled and outpaced inflation in most years.
Relative to the number of homes for sale, the number of agents has doubled over the last two decades. Theoretically, that should lead to more price competition among agents. Yet, counterintuitively, commission fees have remained persistently high and impervious to competition. Residential brokerage commissions don’t appear to reflect the cost of doing business or the quality or experience of agents.
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