For the mortgage sector, the spotlight on commission rates comes at a time when the housing market is already grappling with low supply and escalating mortgage costs. The Biden administration’s focus on these rates is intertwined with the broader issue of housing affordability.
On a median existing-home sales price of $407,100, a 5.5% commission amounts to approximately $22,390 – a cost often embedded in the home’s listing price and subsequently impacting the mortgage value.
The Justice Department stressed the issue in a recent court filing, expressing its apprehension about “policies, practices, and rules in the residential real estate industry that may increase broker commissions,” the agency said.
A shift in this area could reduce overall commissions by as much as $30 billion annually, according to a study by the Consumer Federation of America.
NAR, however, defends the existing system, asserting its role in facilitating homeownership for first-time buyers, especially those from minority and lower-income groups.
