Antitrust Lawyer Blog

This report helps inform Americans about their real estate brokerage options and alert state legislatures and real estate commissions about the danger of enacting laws and regulations that harm competition.

The report followed a workshop conducted by the agencies in October 2005, entitled “Competition Policy and the Real Estate Industry.” The workshop focused on issues related to the competitiveness of the residential real estate industry and covered topics such as multiple listing services, online “virtual office Web sites,” discount and fee-for-service brokers, and minimum service requirements. Panelists at the workshop included real estate brokers, state regulators, and academics.

As discussed in the report, the review by the DOJ and the FTC suggests that, although the real estate industry has undergone a number of substantial changes in recent years – particularly as a result of technological advances such as the Internet – competition in the industry has been hindered as a result of actions taken by some real estate brokers acting through multiple listing services and the National Association of Realtors, state legislatures, and state real estate commissions. In addition, consumers likely would benefit significantly from additional knowledge about the range of options available in brokerage services and fees. Based on their review, the DOJ and the FTC recommend the following to help maintain competition and protect consumers in the real estate brokerage industry:

• The DOJ and the FTC should continue to monitor the cooperative conduct of private associations of real estate brokers and bring enforcement actions in appropriate circumstances.

• The DOJ and FTC should continue to provide state legislators and industry regulators with information concerning the competitive consequences of state legislation and regulations that threaten to or already do restrict competition and consumer choice in the real estate brokerage industry, and take enforcement action in appropriate circumstances.

• State legislators and industry regulators should consider repealing existing laws, rules and regulations, such as minimum-service and anti-rebate provisions, that limit choice and reduce the ability of new brokerage models (e.g., fee-for-service brokers, discount full-service brokers, virtual office Web site brokers, and broker referral networks) to compete and that do not appear to provide any consumer benefits that would justify such restrictions. They should also avoid enacting such laws, rules and regulations in the future.

• The Department, FTC, and industry regulators should promote consumer understanding of marketplace options. Some consumers may not be aware of the range of alternatives available to them when hiring a real estate broker, including the types of business models available and the negotiability of fees, understand the duties owed by their broker.

• The Department, FTC, and industry regulators should assess the feasibility of an empirical study of the real estate brokerage industry.

Andre Barlow
(202) 589-1834
abarlow@dbmlawgroup.com