I am posting this information because many buyers and brokers simply don't understand that there are options when buying/selling real estate. The DOJ has been fighting for the rights of consumers to have options that can enhance their buying power. Many brokers actually think rebates are illegal, this webpage on the Department of Justices website tells a different story. Anti-trust laws apply to... [more]
I am posting this information because many buyers and brokers simply don't understand that there are options when buying/selling real estate. The DOJ has been fighting for the rights of consumers to have options that can enhance their buying power.
Many brokers actually think rebates are illegal, this webpage on the Department of Justices website tells a different story. Anti-trust laws apply to real estate brokerages and they have been actively, successfully making sure we are protected and allowed to conduct our business.
Competition is the engine that powers free markets and encourages dynamic business models to flourish. It's a big sandbox and we all have the right to play, quite frankly I think it's good for all involved.
have a read, there is some very interesting information here;
http://www.justice.gov/atr/public/real_estate/rebates.html[less]
Response by Riversider
about 15 years ago
Posts: 13573
Member since: Apr 2009
NAR has fought hard against this issue. They're goal is to keep commissions high and in the 5-6% range.
The real estate market is not a free market..If it was rates would follow the trajectory of other businesses that have a free rate structure and move to a more logical 1-1.5 range. Bottom line the NAR is not a consumer protection bureau and is a very effective and powerful lobbying group that promotes its own interests.
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Response by KeithB
about 15 years ago
Posts: 976
Member since: Aug 2009
DOJ has successfully defeated them in regards to allowing "discount brokers" access to the various "MLS" systems. The point is that a broker has the right to determine what commission they are satisfied working for. I may accept 1% but acknowledge that the other side will only accept say 2.5-3%. No problem for me, I have almost zero over-head. This model is a win-win for everyone.
I don't want to tell someone else what is acceptable for them, I just don't want them telling me how to run my business. I have found that the model we use works because it acknowledges how the "system" works and we work with it, not against it. Foxtons for example (since someone will bring this up) tried to dominate the market and exclude the current players, hence it failed.
Real estate brokers compete to attract customers in different ways based on price
and non-price dimensions. To compete on price, they can offer lower commissions to
home sellers and, where permitted, rebates to home buyers. On the service dimension,
they can offer more assistance or convenience to customers. Brokers also compete for
customers by marketing their services to potential buyers and sellers in various ways.
Although consumers benefit to some extent from all of these forms of
competition, the available data suggest that brokers may compete less on price than
would be expected in a competitive market. Even though national average commission
rates have fallen steadily since 1991 and commission rates appear to vary inversely with
housing prices, it appears that rates are sufficiently inflexible to cause commission fees to
move in tandem with housing prices. The recent run-up in housing prices illustrates this
phenomenon: from 1998 to 2005, housing prices rose 37 percent in real terms and,
although national average commission rates appear to have fallen from 5.5 percent to 5
percent, average brokerage fees per transaction rose 26 percent in real terms during the
same period.140 At the same time, the efficiencies generated by the Internet and other
technological advances suggest that broker costs should be falling. The evidence also
suggests that rising per-sale profits for brokers induce entry by new brokers so that the
average number of sales per broker declines.
rs time to sign off and head somewhere far,far from NYC real estate.
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Response by Socialist
about 15 years ago
Posts: 2261
Member since: Feb 2010
"Competition is the engine that powers free markets and encourages dynamic business models to flourish."
Except when it comes to the MLS. Then competition is bad. NAR has a huge strong hold over the MLS and anyone who attempts to break up their monopoly will be crushed like a fly.
NAR has fought hard against this issue. They're goal is to keep commissions high and in the 5-6% range.
The real estate market is not a free market..If it was rates would follow the trajectory of other businesses that have a free rate structure and move to a more logical 1-1.5 range. Bottom line the NAR is not a consumer protection bureau and is a very effective and powerful lobbying group that promotes its own interests.
DOJ has successfully defeated them in regards to allowing "discount brokers" access to the various "MLS" systems. The point is that a broker has the right to determine what commission they are satisfied working for. I may accept 1% but acknowledge that the other side will only accept say 2.5-3%. No problem for me, I have almost zero over-head. This model is a win-win for everyone.
I don't want to tell someone else what is acceptable for them, I just don't want them telling me how to run my business. I have found that the model we use works because it acknowledges how the "system" works and we work with it, not against it. Foxtons for example (since someone will bring this up) tried to dominate the market and exclude the current players, hence it failed.
http://www.justice.gov/atr/public/press_releases/2005/211008.htm
Real estate brokers compete to attract customers in different ways based on price
and non-price dimensions. To compete on price, they can offer lower commissions to
home sellers and, where permitted, rebates to home buyers. On the service dimension,
they can offer more assistance or convenience to customers. Brokers also compete for
customers by marketing their services to potential buyers and sellers in various ways.
Although consumers benefit to some extent from all of these forms of
competition, the available data suggest that brokers may compete less on price than
would be expected in a competitive market. Even though national average commission
rates have fallen steadily since 1991 and commission rates appear to vary inversely with
housing prices, it appears that rates are sufficiently inflexible to cause commission fees to
move in tandem with housing prices. The recent run-up in housing prices illustrates this
phenomenon: from 1998 to 2005, housing prices rose 37 percent in real terms and,
although national average commission rates appear to have fallen from 5.5 percent to 5
percent, average brokerage fees per transaction rose 26 percent in real terms during the
same period.140 At the same time, the efficiencies generated by the Internet and other
technological advances suggest that broker costs should be falling. The evidence also
suggests that rising per-sale profits for brokers induce entry by new brokers so that the
average number of sales per broker declines.
http://www.justice.gov/atr/public/reports/223094.pdf
rs time to sign off and head somewhere far,far from NYC real estate.
"Competition is the engine that powers free markets and encourages dynamic business models to flourish."
Except when it comes to the MLS. Then competition is bad. NAR has a huge strong hold over the MLS and anyone who attempts to break up their monopoly will be crushed like a fly.