Florida Mortgage Loan Applicants, Take Note: Real Estate Commissions are Falling

Finally, something buyers AND sellers can celebrate together: Florida real estate agent commissions have been falling in recent years. On average, they now stand around 5%.

Compare this figure to the historical average of around 6% and it’s easy to see the possible savings; On a $250,000 home, for example, such a 1% difference amounts to $2,500 - not exactly chump change. Sort of makes you wanna apply for a Florida mortgage loan right now, doesn’t it?

Just because 5% is the average, of course, doesn’t mean that you can’t find an even better deal. These numbers are negotiable, so you may be able to pocket even more money in the current buyer’s market. First-time home buyers are in luck if they had been living on a misguided budget.

One reason for the drop is tied to the boom in housing prices in recent years. According to James Hagerty in The Wall Street Journal Online:

“Residential real estate commissions in the U.S. totaled $61 billion in 2004, up 42% from 2000, estimates Real Trends, an industry publication.” That wasn’t exactly good news for real estate agents and brokers, he explains, since their ranks boomed, too. The National Association of Realtors has seen its membership swell by some 63% since 2000, to roughly 1.25 million people.

In the big picture, moreover, someone selling a house has more agents to choose between, so he/she should be more inclined to compete for the seller’s business - also leading to flexibility on the commission rate. Indeed, according to a Real Trends/Harris Interactive survey, 62% of real estate brokerage firms are feeling pressured to negotiate commissions.

So, should you sign up with the agent who offers you the lowest commission charge?

Not always. Wait things out. Agent A might offer you the lowest rate, but Agent B might be more skilled - and if he/she manages to sell your home for a higher price, you may more than make up the difference in commission costs. It’s something to consider in this Florida home mortgage market.