Realty commissions shrink

Advertiser Staff and News Services

The bull market in housing on the Mainland has gored the traditional 6 percent realty commission.

As new homes are built in areas like Waikele Knolls, many Hawai'i real estate agents say the stronger market has not affected the amount of commission they usually receive. Richard Ambo • The Honolulu Advertiser

On a $200,000 house, that number suggests sellers were paying $1,040 less in commissions than they would at 6 percent.

Some real estate agents in Hawai'i said their commissions have not followed the Mainland pattern.

"The market is pretty good now that there is more activity. But I don't see any trend in lower fees," said Guy Tamashiro, principal broker for West O'ahu Realty in Waipahu.

Instead, many firms have increased their fees by tacking on the state's general excise tax to the seller's list of costs. In years past, brokers often paid that tax out of their commission.

"It seems to be a growing standard with many of the larger firms," said Steve Weeks, an independent agent based in Hawai'i Kai.

Pushing down commission rates on the Mainland:

• Prices. The median home price grew 84 percent between 1985 and 2000, according to the National Association of Realtors. The increase has let realty firms increase their revenue even as they charge lower rates for services.

• Consumers. More sellers, recognizing that it takes no more work for an agent to sell a house just because its market value is rising, are asking for concessions.

• Inventory. In many markets, the number of shoppers swamps the number of available houses. This high level of demand has induced firms to reduce their rates.

• Competition. Traditional brokerages face competition from discounters. In addition, many customers ranging from corporations relocating employees to warehouse clubs are demanding price breaks in return for supplying clients.