Breaking the US Real Estate Cartel


            Sheffield           If you’ve ever tried to buy a house, you likely know what dealing with a real estate agent is like, as both friend and foe.  You might have been looking on your own, but driving around wasn’t getting the job done, and these days the newspapers don’t even bother running the ads that decades ago were the way to go, rent or buy.  You might have spent time on Zillow or Redfin or something and still noticed every time you clicked the button, you still ended up talking to a real estate agent, even though you’d let “your finger do the walking,” as the ads used to say.

            You decide to find an agent to give you a hand who might know more about what is in the market that would fit your family and your wallet.  You might call the number on a sign you’ve seen.  You might start asking friends and neighbors.  Somehow you end up with one. You are asked to sign a contract, usually before you get looking or walk into a house with an agent.  The contract will guarantee a commission, which can run up to 7% or might be as low as 5%, but that’s more an urban legend, like rats that talk.  The contract will also say that if you and your agent are looking at a property handled by another agent, they’ll split the commission.  There will be talk about the separation between the buyer and the seller’s agent, but that part will never be very convincing.  The only thing certain is that they will both be paid, if you buy, so maybe it’s in their interest for you to sign a contract, so they get paid. The only thing that is crystal clear is that it is in the interest of the agents for you to pay the highest price that they can get you to pay, so they take home more.

            No surprise, especially now when the market is tight, interest rates are higher, and shortage is pushing up the prices, that people are looking for a way to get lower prices.  Breaking up this okey-doke role of real estate agents and their practices and listings directed by the National Association of Realtors and its member brokers and agents is high on the list.  These are bad folks, but there is good news.  A jury found NAR and several of the brokerages guilty of antitrust violations.  The judge assessed the damages at almost $1.8 billion and has the ability to triple that to more than $5 billion.  They are squealing like stuck pigs now.  Several brokerages dropped out of the suit, seeing which way the wind was going to blow, and have already agreed to pay more than $100 million.  NAR is promising an appeal, and some of the other brokerages are likely to appeal as well.  Their stock prices are falling.  Some may be influenced by the fact there is an even bigger and more expensive case still pending that could imperil them even more.

            The bottom line is that there’s virtually no way they are going to slip this noose.  Maybe they’ll pay lower damages, but they will have to change the rules of the game, and that’s good for all of us.  There might be real negotiations on price.  There will definitely be lower commissions paid to agents and maybe even higher walls between them.  Breaking this real estate monopoly won’t change the world, the number of home buyers, or the percentage of US homeowners, but it’s definitely a win for consumers and will keep some money in your pockets, where it always belonged.