Sunday, June 1, 2008

Realtors Weep As Consumers Win

The real estate market might finally be taking the long-awaited nanometer long steps toward greater efficiency and increased competition following Friday's agreement between the U.S. Justice Department and the National Association of Realtors that would allow internet and discount real estate brokers full access to the MLS service without discrimination and without the NAR blocking web listings.

One school of thought is that this agreement will create downward pressure on the 3% to 6% sales commission that homesellers and homebuyers have had to pay to realtors.

From the NY Times article from 28 May 2008:

Norman Hawker, a business professor at Western Michigan University who organized a symposium on the Justice Department litigation as a senior fellow for the American Antitrust Institute, predicted that the settlement would ultimately mean a drop in sales commissions of 25 percent to 50 percent as a result of increased competition.

“It’s pretty clear that there was an enormous amount of discrimination against brokers who were trying to use innovative business models,” including discounted fees and virtual offices on the Internet, he said. “There are lots of entrepreneurs who have been looking for a green light in the form of this order to begin offering discounted rates. It has the potential to be a big step forward for consumers.”

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