Contracting for Real Estate Fees Incurred by Federal Agencies

PSAD-79-7: Published: Nov 6, 1978. Publicly Released: Nov 6, 1978.

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As a matter of practice, Government employees have paid and then have been reimbursed for the real estate agent fees involved in selling their homes when they move at Government expense. Generally, no attempt has been made to obtain competition in contracting for these services.

While statistics showing the exact number of civilian Federal employees moving annually were not readily available, it was estimated that as many as 140,000 employees relocate each year. Real estate fees paid by these employees were normally in the range of 6 to 7 percent of the selling price. Based on the national average selling price of an existing home, GAO computations revealed that a commission reduction could save the Government about $69 million annually for each percent. It was revealed that the prospect of repeat business often induces relocation service companies to offer reduced commissions to private companies and individuals, and that these services would probably be interested in offering reduced commissions to the Government, as well. GAO suggested that the Government test the use of competitive contracting of real estate services in a particular city or regional area where a substantial number of Government employees would be moving. Procedures for obtaining such rates competitively or for establishing a benchmark rate could be developed and tested in such an area.

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