NEW Dept Of Justice WEB SITE EXAMINES COMPETITION IN BROKERAGE SECTOR
The Antitrust Division of the U.S. Dept. of Justice launched a new Web site this week aimed at educating consumers about the benefits of competition within the real estate brokerage sector. The site, which is drawing heavy criticism from the real estate industry, offers user tools, such as a calculator to help consumers assess potential savings, maps of states with laws in place that the DOJ says inhibit competition within the industry, and links to government resource sites.
NAR characterized the site as a "flagrant disregard" for free competition, saying the Web site is being used as a promotional tool by the DOJ to push for a single, discounted brokerage services model, threatening to cut agent commissions in the process.
"The real estate market is very competitive," said NAR officials. "NAR encourages innovation and fair competition in real estate brokerage, and favors no business model." In addition, NAR added that real estate commissions remain negotiable across all sectors, driven by market forces to "attract clients and retain the best agents."
FOR IMMEDIATE RELEASE
ANTITRUST DIVISION LAUNCHES WEB SITE ON COMPETITION
WASHINGTON -- The Antitrust Division of the Department of Justice launched a new Web site today to 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. Among its features, the Web site includes maps identifying states with real estate laws that can inhibit competition, a calculator to help consumers tally their potential savings when brokers pursuing new business models compete for their business, and links to additional government resources. The address is: http://www.usdoj.gov/atr/public/real_estate/index.htm.
"Buying or selling a home is the largest financial transaction most Americans will ever undertake," said Thomas O. Barnett, Assistant Attorney General in charge of the Department's Antitrust Division. "This Web site will help consumers and policymakers understand the benefits of increased competition among real estate agents."
The estimated median commission paid by home sellers in 2006 was $11,672, according to the Antitrust Division. New real estate brokerage models have the potential to reduce that amount by thousands of dollars. For example, in states that allow open competition, some buyer's brokers rebate up to two-thirds of their commission to the customer, and some seller's brokers offer limited-service packages that let sellers list their homes on the local multiple listing service (MLS) for as little as a few hundred dollars.
Excerpt from their website
Home Prices and Commissions over Time
Brokers typically charge a commission based on a percentage of the home's sale price. Over the past decade the average commission rate has remained relatively steady between 5.0 and 5.5 percent. As a result, the actual median commission paid by consumers rose sharply along with the run-up in home prices.
Unless broker costs were also rising sharply during this period of time, competition among brokers should have held commissions in check even as home prices were rising.
Realtors® income rose 22% over the last 10 years.
Chart Non-supervisory Workers ( The Average Joe on The Street)
Non-supervisory workers income rose 33 to38% over the last 10 years
Our goverment is saying that it is ok for the average Joe to get a 33 to 38% raise over 10 years but if you are a Realtor® a 22% raise over 10 years is gouging the public and there needs to be more competition. I bet you the Antitrust Division of the Department of Justice received a raise larger than 22% over 10 years! What do you think?
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