by Francis Jock

Created on: May 18, 2009   Last Updated: March 03, 2010

Are San Antonio realtors and Virginia Beach realtors worth the money? With housing prices hovering around $122,055, a San Antonio realtor will earn a sales commission of $8,544 for handling the property search and paperwork that comes along with selling a home. On the other hand, a real estate agent in Virginia Beach, where the average home price is $177,701, will earn a sales commission of $12,439. Clearly, it pays more to be a real estate agent in Virginia Beach than in San Antonio. In either location, however, the real estate agent's commission isn't paid by the home seller.

Although different locations command different home sales prices, the commissions earned by real estate agents are relatively the same everywhere, usually between 6 or 7 percent of the sale price. Real estate agent sales commissions are not fixed rates by any means. In a normal inflationary housing market, home sellers tend not to be overly concerned about commission rates, as they simply pass the cost along to the home buyer by adding it to the home's sales price. Home sellers can negotiate lower commission rates with real estate agents, thereby reducing the overall price of a home and possibly making it more marketable, but the final cost of the agent's services are still paid for by the home buyer.

A natural outcome of passing along real estate commissions over time is inflation in home sales prices. Depending upon a home's location, until recently, home prices increased at an annual rate of 8% creating the now infamous housing bubble. Then, in 2006 home prices began to freefall in several major metropolitan areas as the housing bubble began to collapse under the force of its economic weight. One overlooked factor that contributed to the expansion of the housing bubble is the compounding effect of the cost of real estate commissions paid repeatedly as homes are bought and sold.

During the bubble years, some real estate agents denied the impending doom and many real estate "get-rich-quick" entrepreneurs lured thousands of novice investors into the lurid world of real estate investing and house flipping. Encouraged by low interest rates and easy access to money, many people that should have stayed out of the bubbling real estate market invested millions of dollars into single-family dwellings expecting to make millions in return. Real estate agents, always standing by, ready to help in the home buying process were glad to collect their commissions along the way. Real estate agents grew

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