I was watching the April 12 episode of The Deed:Chicago (Analysis Paralysis) when I noticed the star of the show, who has been a Chicago real estate fixture for some time, make 3 references in the last 10 minutes of the show to a “standard real estate commission”. He should really know better than to use that term. Not only does a standard real estate commission not exist (in Chicago or elsewhere) but it’s totally inappropriate to reference it – especially on national television.
I was actually surprised that you have to dig pretty deep on the Web to find references to this issue but when we first did our real estate training they really drummed this point into us. The issue is that the Federal Trade Commission has had their eyes on the real estate industry for decades out of fear (justified in the past and maybe even today) of price fixing. Consequently, it is strictly verboten for real estate agents to conspire to set “standard commissions”. Furthermore, any reference to a standard commission suggests to the consumer that price fixing has in fact occurred – which is either a lie or evidence of a violation of anti-trust laws. See the issue?
In theory commissions are always negotiable and some brokerages offer low real estate commissions on a regular basis. And obviously individual real estate brokerages are free to set their own standards. This may in fact give the star of the TV show an excuse for what he said. The first two times he used the phrase the context was a standard real estate commission for Chicago. However, the third reference sounded like maybe he was talking about a standard real estate commission within his brokerage, which I believe is OK.
BTW, I also believe it’s OK to talk about an average, typical, or range of commissions in Chicago because those can be statistical facts and don’t imply any sort of price fixing.
So keep this in mind when you are talking to a realtor about selling your home. If they use the term standard commission call them out on it. Ask them who sets the standard and how that’s legal. That should result in an interesting conversation.
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On a separate note it appears that at least AT&T Uverse is no longer carrying The Deed:Chicago in Chicago. I can’t find any more episodes of it, though from the Web site it appears that they have produced additional episodes. I’m disappointed.
#RealEstate #RealEstateCommissions
Gary Lucido is the President of Lucid Realty, the Chicago area’s full service discount real estate brokerage. If you want to keep up to date on the Chicago real estate market, get an insider’s view of the seamy underbelly of the real estate industry, or you just think he’s the next Kurt Vonnegut you can Subscribe to Getting Real by Email using the form below. Please be sure to verify your email address when you receive the verification notice.