The Fed's 2 Cents on 6 Percent Agents


Yesterday, Housing Watch's Brett Widness and Ana Maria Sencovici went head-to-head in a debate about the value of the standard 6 percent commission for real estate agents (or 3-and-3 for the common situation in which both buyer and seller retain an agent, and the two split the commission).

Let's bring in a referee: economist Oz Shy, senior economist at the Federal Reserve Bank of Boston. In an analysis published this fall, he set out to calculate the magic number, the exact commission rate at which both seller and agent get the best possible outcome – for the seller, the highest sale price, and for the agent the top commission.

Shy confirms what many sellers already suspect about the 6 percent fee, which is that if the entire fee goes to the seller's agent, the seller is not getting the best possible value.