Americans pay real estate brokers twice as much as people in most other developed markets despite an increase in real estate sites, like Zillow, Trulia and Redfin, which offer home-buyers the chance to search for properties.
Commissions for real estate brokers have remained the same at 6 percent – 3 percent on the seller’s side and another 3 percent for the buyer’s agent – even with the cheaper options available for buyers and sellers.
About 87 percent of homebuyers in the U.S. use the services of real estate agents, according to a CNN report.
Half of buyers find their homes independently online but still end up retaining an agent, according to a survey by the National Association of Realtors.
There is roughly $900 billion worth of real estate changing hands every year with an estimated $74 billion of real-estate-agent commissions paid out in 2018 alone.
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Tech investors have poured billions into all kinds of disrupters aimed at eating into these commissions as they have done with airlines and hotel bookings.
“There’s over 100 million active users on Zillow and Trulia every month, but only 6 million people buy and sell houses every year,” Charles Folsom, Knock’s director of customer service, told Market Watch.