FTC And Real Estate
Following up on a post from last night, the FTC announced a real estate broker enforcement sweep. According to the press release:
The Federal Trade Commission today charged two real estate groups operating multiple listing services in the Detroit, Michigan, area with illegally restraining competition by limiting consumers’ ability to obtain low-cost real estate brokerage services. The Commission also announced consent agreements with five other groups operating multiple listing services in parts of Colorado, New Hampshire, New Jersey, Virginia, and Wisconsin, that have discontinued the challenged conduct. According to the FTC, all seven groups adopted rules that withheld valuable benefits of the Multiple Listing Services (MLSs) they control from consumers who chose to enter into non-traditional listing contracts with real estate brokers. Six of the seven blocked non-traditional, less-than-full-service listings from being transmitted by the MLS to popular Internet Web sites. The seventh went further, adopting policies that include blocking such non-traditional brokerage contracts from the MLS entirely. Such policies limit home sellers’ ability to choose a listing type that best serves their specific needs. While five of the groups have entered into consent orders barring such conduct in the future, the two in Michigan have not, and the FTC has issued administrative complaints against them.
Shlep has already blogged about this, and an AEI-Bookings study on the real estate brokerage commission structure.
The Washington Post has also reported on the FTC action. The Post reports that:
Some antitrust experts say the aggressive role the FTC has taken signals a possible shake-up ahead for an industry that has long clung to its way of doing business. The newer firms generally offer a la carte services, such as entering a listing but not holding open houses, for reduced commissions or flat fees. “The industry will either undergo a revolution where you will see brokers’ fees go down and alternate business models thrive or incumbents will prevail,” said Mike Cowie, a former FTC official who is now a lawyer at Howrey LLP.
I think it is fair to say that David Giacalone would welcome a “revolution.”
Technorati Tags: antitrust, real estate
RSS Feed
November 16th, 2006 at 2:56 pm
We are a real estate brokerage that offers a flat fee in Washington state, Oregon, Arizona and Hawaii. We had an agent at a reputable company posting “Boycott Discount Brokers” in the commission comment section of the MLS. When I approached his broker, he laughed at me and said “good for him”. It was quite shocking!