What tends to happen to commissions during economic downturns?

During economic downturns, it is common to see a decrease in sales volume within the real estate market. As sales decline, the total commissions earned by agents also typically decrease. This is a result of fewer transactions occurring, which directly impacts the income that agents can earn from commissions. When the market experiences challenges, such as high unemployment or reduced consumer confidence, buyers and sellers may hold off on making real estate decisions, leading to fewer homes being bought or sold. Hence, the overall decrease in sales is a key factor that drives down the volume of commission income for agents during these times.

In contrast, the other options suggest scenarios that do not accurately reflect the trends typically seen in real estate during economic downturns. For instance, suggesting that commissions increase to offset losses is misleading, as market conditions usually do not support increased sales or commission rates when fewer transactions are occurring. Similarly, the notion that commissions remain the same regardless of market conditions overlooks the direct correlation between market activity and sales volumes. Lastly, the assertion that all real estate agents earn more during downturns disregards the basic economics of commission-based income where reduced sales lead to reduced earnings.