Thursday, May 10, 2007


The U.S. Federal Trade Commission and U.S. Department of Justice just released a "Competition in the Real Estate Brokerage Industry" report that calls for a repeal of real estate laws, rules and regulations that limit choices for consumers, limit competition for new brokerage models and don't appear to provide any justifiable benefits for consumers. The report also suggests that industry commission rates have been relatively inflexible and calls for an in-depth study of commission rates and fees.

(Written with sarcasm) I can certainly see why! The commission fees in 1991 were $9,389. In 2006 they were a whopping $11,549! And when that 5.02% commission is split between 2 cooperating brokers that is a mind boggling $1,080 raise for each broker after 15 years. This is an outrage and real estate agents certainly do not deserve such a lucrative increase in income. It is very clear why our federal tax dollars should be spent on such an in depth - and expensive - study. Kudos to you DOJ & FTC. Kudos.


  1. My question is: why wouldn't you support something that removes limits on consumer choice or limits competition? Those are the cornerstones of our economy and the American way of life.

    Isn't the ability to choose how you want to sell your house a justifiable benefit?

  2. One more thing -- don't you think encouraging competition would lead to higher commissions for GOOD realtors, like you?

    Right now, the good and the bad are locked into the same fixed-rate model which doesn't really reward those who are exceptionally good or punish those who are bad.

    If the industry opens itself up for real competition and innovation, my guess is that a big chunk of Realtors will decide to quit the industry, leaving much more business for the good ones...and improving the industry's image at the same time.

    To me, it looks like good Realtors can only benefit long-term...and you'd definitely be one of those.

  3. Thanks for the props Cooper. I was writing with sarcasm so I can't tell if you thought I was agreeing or disagreeing with the report. But I definitely agree with you. I think it's silly that the DOJ and FTC are implying the public has no choices when it comes to selling their home. Right now you can put your home in the MLS for something like $350, slap a keybox on your home and congrats! Your home is on the market. Or you could hire a successful Realtor with a good track record and a great reputation in the community and pay around 6% in commissions (3% goes to the listing broker and 3% goes to the buying broker). Sound business and financial sense would tell you to hire a good real estate agent to handle the sale of what is probably the biggest financial investment of your life. But yet people hire incompetent real estate agents every day and I can only scratch my head and wonder why. But I digress. The point is that people DO have a plethora of choices when it comes to the cost of selling your home. And to speak to your comments about the good Realtors benefitting from this type of competition. Remember that 85% of real estate sales are made by 15% of the real estate agents. So the good ones really are being rewarded for their hard work and great customer service. And I shamelessly agree with you that I would fall into that category!