The Antitrust Division of the Department of Justice (DOJ) has launched a website to educate consumers about the benefits of competition in the market for residential real estate brokerage services. The website’s features include an interactive United States map that allows users to identify states with laws that inhibit competition for real estate brokerage services and an online calculator for estimating potential savings achieved through competition for such services. The address is:
Data on the DOJ’s “Competition and Real Estate” website indicate that the median commission paid to real estate brokers in 2006 was US$11,672 (based upon a median home sale of US$225,334). Over the past decade, broker commission rates have remained constant, averaging between 5 and 5.5 percent of the purchase price, despite dramatic increases in home prices. Therefore, unless brokers’ costs have increased in step with home prices, the DOJ posits, competition has not been allowed to temper rising broker profits.
The website identifies four specific barriers to competition for real estate brokerage services, and indicates which states’ laws and regulations obstruct competition. These include: (i) laws that forbid buyers’ brokers from rebating a portion of the sales commission to the buyer; (ii) minimum service laws that dictate the bundle of services a consumer must purchase when entering into a brokerage relationship, thereby precluding fee-for-service arrangements that reduce costs for brokerage services by permitting consumers to purchase only those services they need or want; (iii) laws that raise closing costs by, for example, requiring that they be performed by attorneys; and (iv) tactics used by regional brokers to inhibit low-cost brokers including Internet-based brokers from accessing regional Multiple Listing Services. Touting the importance of the DOJ’s recent focus on competition in the real estate market, Thomas O. Barnett, Assistant Attorney General in charge of the Antitrust Division, stated “This website will help consumers and policymakers understand the benefits of increased competition among real estate agents.”