THINK YOU'LL FIND ANY BUSINESS THERE?
Reading the Horizontal Price-Fixing in Cyberspace is a depressing experience, at least to those of us who work on commission where fees are negotiated, contingent and the risk to the licensee is great, not to mention the cost of competing for the business in the first place. The writer appears to believe that by advertising prices on the Internet that some mysterious force will cause brokers, agents or lenders to raise fees. I have yet to meet a Virginia or Maryland home buyer who shops lenders who goes with the highest rate quoted. Nor have I met a home buyer or seller who will hire the most expensive seller or buyer's agent unless that agent can convince the consumer that the higher fee will result in a higher bottom line for themselves. On a one-to-one basis, some agents may obtain a higher fee than others where the competition is obviously incompetent or the property is a niche property that demands specialized experience. For the average home seller interviewing 3-4 agents, the agent who charges the higher fee is not going to get the listing unless they can convince the seller that the net proceeds will be sufficiently high to justify the higher broker fee. THAT is a matter of personal presentation and these agents are not competing with the flat fee or fee-for-service agents/brokers.
Funny thing about personal service fees where performance varies from agent to agent. No matter how good an agent promotes him/herself to a potential client, there are two sides to every transaction and agents are presenting only to a potential client, not the other side of a future contract. There are far to many variables, pitfalls, contingencies, personalities involved in selling resale real property to possibly compare fees from one agent to another, let alone believe that advertising a higher price is going to cause some price fixing force in this industry. That dynamic alone determines how much the agent must invest in future business or will they, through superior performance, develop a following of referrals and have fewer Schedule C deductions for advertising expenses. Price fixing between brokers in the past has been between brokers in a local market who got together and agreed to maintain a price level. They were prosecuted and rightly so. Agents and brokers are loathe to even mention a commission rate in public for fear of prosecution.
The discussion of commissions for real estate brokers usually WRONGLY begins with the taking of a listing - buyer or seller and ends at settlement. FTC and DOJ investigate the real estate industry almost entirely from the perspective of the total fee charged with no consideration to the different services performed. Good grief, why does a Cadillac cost more than a Chevrolet? They are not the same. Fee for service and flat fee brokers are not the same as full service real estate brokers or full service lenders. What is so often over looked is the investment that the broker or their agents make for the market share that they service. The attorneys at FTC see only the commission check received by the broker. They cannot possibly be looking at the net income after Schedule C of the average real estate broker or Independent Contractor agents.
When talking about real estate practitioners or lenders, we are: licensed, work on commission, pay our own advertising expenses and overhead. Then we are retained by a buyer or seller to represent them in a real estate transaction and the difference don't stop there. Some agents, brokers, lenders, etc. will show a number of homes, meet with a borrower a number of time in person or by phone, attend inspections, settlements, spend endless hours scheduling, verifying compliances, and more, and, IF everything falls into place between two sides with totally different goals, one buying and one selling, we MAY reach a successful conclusion and get paid for our work.
YOU HAVE TO HAVE SOME IDEA OF WHAT YOU'RE DOING TO SUCCEED IN REAL ESTATE SALES. However, there is absolutely no similarity in the tasks performed to reach that conclusion between the average two agents or ten or a hundred. PERSONAL REPRESENTATION IS NOT SELLING SHOES, OR AIRLINE TICKETS. Furthermore, there is no similarity in the overhead of each agent or broker to reach that market. I refuse to compete with listing agents for listings. I refuse to compete with other Virginia or Maryland buyers agents for buyers. Our services are described in great detail, our experience demonstrated, our ability to help our buyers meet their goals is successful and we are paid AFTER THE JOB IS DONE.
THAT fact alone removes the ability of any regulator to begin to understand what we do, let alone compare fees between brokers, agents or lenders. The success or failure of an agent or broker relies on capital investment in dollars and commitment to hard work. To date, the DOJ and FTC haven't factored that in their quest to attempt to make all real estate licensees equal in the eyes of the public.
Attempts to bring fees of full service brokerage services DOWN to the level of flat fee or fee for service brokers is a non-starter. Brokers and agents committed to serving the buyer or seller client will, by necessity charge what is necessary to remain viable. With 2,000,000 plus licensees for a population of 300,000,000 persons, less than half of whom could be home buyers and not everyone looking for a home at one time, I would suggest to anyone who believes that it is easy to earn a living income selling real estate needs to do the math. What is so often overlooked in the DOJ and FTC picture is the sheer numbers of agents and brokers competing WITH EACH OTHER is a built in barrier to antitrust activities.
Inspired by Jeff Belonger
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Posted by 
Lenn,
You brought up a great point. We, in essence, work for free up until the transaction is complete. Not many people out there are confident enough to do that.
Ann