Real Estate Transparency

real estate transparency
10 Steps to Home Buying

Ten years ago, I reported on the growing demand of transparency in real estate.  As you can imagine, mistrust of real estate agents was at an all-time high after the housing market crash.  At that time, home buyers and sellers felt betrayed by an industry that was perceived as keeping their cards close to their chest.  However, times were changing and consumers demanded real estate transparency, especially from their agents.  Home buyers and sellers not only want their agents to act in good faith, but also want more information and communication during the transaction. 

Since then, the National Association of Realtors ( has been trying to mend their reputation.  The 2015 DANGER Report was intended to identify issues affecting the industry as well as provide a roadmap to the future.  One of the major issues identified was agent competency and ethics.  However, it was obvious that ethical Realtor behavior didn’t guarantee competency. And vice-versa.  The upshot of the Report was that many of the identified concerns were already known.  Ironically, the identified issues and answers only prompted more questions.  It was not known if and how the industry would provide real estate transparency.

Fast forward to 2019, when the real estate industry is at a crossroads.  Earlier this year a class-action law suit was filed that challenges how agent commissions are paid.  Also, earlier this year, the Consumer Federation of America ( published the first in a series of reports focused on “the lack of real estate agent transparency on representation, compensation, and service.”  The Consumer Federation of America (CFA) is described as an association of non-profit consumer organizations that was established in 1968 to advance the consumer interest through research, advocacy, and education.

The class-action suit filed in March, if successful, has the potential to force a major change to the industry.  Besides having the potential to change how agents are paid, it may force increased real estate transparency in agent compensation.  Nevertheless, similar past challenges to the NAR and the real estate industry resulted in minimal (if any) change to how business is conducted. 

Serendipitously (or not), Stephen Brobeck’s most recent CFA series report, “Hidden Real Estate Commissions: Consumer Costs and Improved Transparency”was published this month (  The report confirms consumers’ “lack of understanding” of commissions.  It also points out how “concealment of commissions” does harm to consumers.  The report indicated that 70 percent of the agents surveyed charge six-percent commission.  Commissions are mostly uniform, more so for buyer agent commissions.  The report also indicates that there was a general rationale that buyer agents would not show property if the buyer agent compensation was below the average for the area.  Of the agents surveyed, 73 percent indicated they won’t negotiate their commission.  It also calls attention to administrative fees of several hundred dollars, which is typically charged in addition to commission. 

The report concludes that the real estate industry must change its attitude about agent compensation, or risk eroding consumer trust.  Home buyers and sellers are savvy, and are increasingly sensitive to the role that commissions play in housing costs.  Home seller costs could be reduced if consumers compare commission rates and ask if they are negotiable.  Home buyers can also be helped if they are aware how their agent is paid, as well as knowing the offered buyer agent compensation on homes listed in the MLS. 

Original article is published at

By Dan Krell
Copyright© 2019

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Disclaimer. This article is not intended to provide nor should it be relied upon for legal and financial advice. Readers should not rely solely on the information contained herein, as it does not purport to be comprehensive or render specific advice. Readers should consult with an attorney regarding local real estate laws and customs as they vary by state and jurisdiction. Using this article without permission is a violation of copyright laws.