The evolution of the brokerage fee

This article presents a history of brokerage fee rates and fee sharing practices, including a discussion of antitrust law and the damage inflicted by anticompetitive practices.

The formation and defense of the standard

The standard 6% brokerage fee appears repeatedly in California real estate history. In the past, Association of Realtor (AOR) boards colluded to cement the practice of charging 6% brokerage fees on all single family residence (SFR) transactions.

As a result, brokers who priced competitively against the 6% standard were confronted with AOR administrative discipline, ultimately facing arbitration to pressure them to conform to AOR fee customs.

This price fixing violated California antitrust laws by setting rates all union members were to charge, thus restricting competition between brokers soliciting and providing services to the public. [Calif. Business and Professions Code §16720]