Real Estate Brokerages are Price Setting Cartel

June 14, 2006 – 10:02 pm

Brokerage industry accused of price setting

A report conducted by the Consumer Federation of America - a pro-consumer advocate - will be released on June 19. It should be a good read as it accuses the real estate brokerage industry of being a price-setting cartel. A conference to be hosted by the group on June 19 will address the industry "hot topics" like price-setting, how buyers and sellers can lower realtor commissions, how brokerages harm consumers, and how the industry stifles limited service competition. It will be interesting to see what effect this report and conference have on consumers as a whole. Currently there are just too many home sellers ignorant to the minimum service laws being passed that eliminate consumer choice.

By admin | Posted in Real Estate, consumer federation of america, minimum service laws, real estate brokerage | Comments (0)

Zillow Aims for Realty Riches

January 20, 2006 – 2:17 pm

CEO reveals views on real estate

Rich Barton, who founded Expedia, believes a changing consumer brings new opportunities in real estate services. In an exclusive Inman interview at NY Real Estate Connect, Barton tells why he’s excited about entering the industry.  Just when the year-old company will launch, and what its service will ultimately offer, remain tightly guarded secrets. So does the origin of its name.

Besides traditional brokerages, including giants like RE/Max and Cendant, Zillow will also compete with mom-and-pop real estate agents. It will also face competitors online, including HouseValues.com, based in Kirkland, Washington, and IAC/InterActiveCorp subsidiary RealEstate.com.

 

Then there’s the fate of the Multiple Listing Service, a database of real estate listings submitted and shared by real estate agents. To use the service, one has to be a registered realtor. Critics say that helps real estate brokers preserve their livelihoods, but harms the consumer.

 

The U.S. Department of Justice filed an antitrust lawsuit against the National Association of Realtors during September, alleging the association obstructs competition, threatens to lock in outmoded business models, and inflates real estate prices.

 

While Zillow says that the company is an advertising vehicle, many in the real estate industry are holding their breath to see how the new venture will impact their sector of the industry. 

Assuming Zillow.com does unveil its service within the next quarter or so, it will arrive in a marketplace characterized by significant competition from above and below, as well as a more general controversy about what it means to be in realty during the Internet age.

By admin | Posted in Discount Commissions, FSBO, For Sale By Owner, MLS, multiple listing service, real estate brokerage | Comments (0)

Flat Fee MLS Brokers Gain Momentum

October 26, 2005 – 3:34 pm

DOJ/FTC Workshop gives voice to limited service models

Yesterday’s Department of Justice’s and Federal Trade Commission’s Public Joint Workshop entitled "Competition and the Real Estate Industry" gave voice to the many alternative brokerage models vying for space in the hotly contested real estate arena. Panelist from a wide spectrum of disciplines surrounding the industry, as well as moderators from the DOJ/FTC, gave differing opinions on their visions for the future of real estate brokerage, however, one message seemed to radiate clearly with participants.

Minimum service requirements have no place in a free and unfettered economy. The effect of such laws clearly seems aimed at impeding the growth of alternative brokerage models, especially flat fee, MLS entry only companies. Steve DelBianco, Executive Director of the NetChoice Coalition, and Tom Early of the National Association of Buyers Agents (NAEBA) combatively and humorously debated leaders of the traditional real estate cartel demonstrating how such impediments to innovative business models as legislatively imposed minimum service requirements serve to harm consumers by creating barriers to brokers wishing to offer consumers choices in real estate services.

Over the past year, the DOJ and FTC have issued a number of letters to state legislatures around the country warning of the deleterious effect of proposed minimum service laws on consumers. So far, the National Association of Realtors and their state level counterparts have been largely successful in foisting bills on the unwitting public that limit consumer choices and help to prop up the antiquated system of bundled real estate brokerage services and full (5-6%) commission real estate.

See Also

By admin | Posted in flat fee, limited service, lower commission, minimum service, mls entry only, real estate brokerage | Comments (0)