Realtors have managed to retain the traditional 6% compensation structure, despite the typical pressure capitalism exerts on margins. An article in this week's Dallas Business Journal highlights some interesting facts. During the last eight years, licensees in Dallas (as measured by MLS subscribers) have increased by over 100%, while the volume of property sold has increased by just over 75%. These figures might indicate a saturation point that would exert pressure on commission rates in Texas. However, California and Florida have 11.2 real estate broker licensees per 1,000 people, while Texas has 4.3 (using 2004 numbers). These figures indicate that Texas is far from saturation.
My guess is that the commission structure is not challenged by increased realtor competition because the best realtors are going to set the rates. Rather, the real challenge seems to be that the commission structure will be affected by increased technology. For example, Google has just gotten street level pictures of every home and street in the Dallas - Fort Worth metroplex. It is amazing to be able to drive around my neighborhood with a 360 degree view. The implications for real estate brokerage as Google moves into more businesses could be significant.
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