The Department of Justice (DOJ) yesterday launched a website to ostensibly "educate consumers and policymakers about the potential benefits that competition can bring to consumers of real estate brokerage services and the barriers that inhibit that competition". (DOJ press release is here).
The site links extensively to an April 2007 report from the FTC and DOJ titled, "Competition in the Real Estate Brokerage Industry."
There is little doubt this site was born out of the long-standing Sherman anti-trust suit the DOJ originally filed against the National Association or Realtors (NAR) on September 8, 2005. Very briefly, this suit alleges the NAR maintains and enforces a policy "that restrains competition from brokers who use the Internet to more efficiently and cost effectively serve home sellers and buyers".
As one who feels they use the Internet more efficiently than a significant portion of agents and brokers, I can only say this…
I wish both the NAR and the DOJ would cease and desist with their squabbles and find better ways to spend my dues and tax dollars respectively.
But that's just my opinion. Other's mileage may vary.
If I can ever find the time, I'd love to do a "site review" on this site. But I only had about 20 minutes to poke around. (I'm surprised I didn't see more about this site launch across the real estate blogiverse today.)
The DOJ's website is large, and there is some good information there for real estate professionals as well as real estate buyers and sellers. There is a section on state laws showing which states have limited service regulations and which states outlaw commission rebates. "Consumers" may find this of interest.
There is clearly no "NAR Spin" on the DOJ site that I've been able to find. Flat-fee "MLS Only" brokerage rates are posted along side typical full-service brokerage fees. Fee-for-service models are also discussed at length.
I suspect this site will be appealing to the real estate buyer and seller as it highlights "savings" that can be had with various types of brokerage models. There is no question that one can reduce the cost of commission for selling a home by enlisting a "MLS Only" service. What is not discussed on the site (at least that I can find) is any mention of the success (or lack thereof) of actually selling a home utilizing flat-fee deep discount brokerages. An honest and thorough analysis of commission savings has to include opportunity cost, time-to-sell, holding costs and various other considerations — all of which appear to be missing from the DOJ site
I may be drawn and quartered by some "traditional" agents for saying this, but I've got no problem with flat-fee and/or discount brokerages. I think having different types, styles and pricing models for real estate brokerages is a good thing. It promotes competition and innovation — both of which this industry desperately needs.
I just don't think we need either the NAR or the DOJ telling us how to do it.
Updated – Others Opine: Jim Duncan, RealCentralVA makes a great point. Inman Blog. ARDELL at RCG, never short of an opinion!,
[tags]NAR, DOJ, discount brokerages, disintermediation[/tags]
Late Night Austin Re says
One of the issues I see is that unlike purchasing car insurance in no state is anyone forced to use a realtor. Everyone can always sell their home for sale by owner.
The other issue is that in Austin discounters frequently pushed the work they should be doing onto the other agent. They havent found a business model that is more cost effective they simply found a way to force another person to do their work for them.
Some of the state rules are simply trying to stop agents from doing this. In Texas a sellers agent has to deal with the buyers agent. Before this sellers agents sat on the sidelines during a transaction and some buyers where dealing with both sides and having to explain the transaction and answer questions of the buyer and the seller. Its also problematic because the seller is asking for advice from someone that is legally obligated to protect the interest of their client, the buyer.
Arthur Jamieson says
Great post! I’ve been very interested in real estate competition and its importance for a long time. I didn’t know about this site. Thanks for sharing this.