Washington, D.C. — This afternoon, Stephen Brobeck, Consumer Federation of America (CFA) Executive Director, will serve as a panelist in the Federal Trade Commission-U.S. Department of Justice public workshop on real estate brokerage competition. In written comments that also discuss the consumer complexity of residential brokerage issues, he makes and explains the following general points:
- Most recent buyers and sellers are generally satisfied with brokerage services they have received, but do not understand how these services are priced.
- Buyers and sellers are charged relatively high and uniform commission rates.
- Commission rates are high and uniform mainly because consumers are at a great informational disadvantage, because buyer broker compensation is coupled with that of listing agents, and because a glut of agents exerts great social pressure within the industry to keep rates high. These factors also help explain why nontraditional brokers offering lower prices and/or price rebates have not yet gained significant market share.
- Consumers do not have reliable information about the quality of service provided by different agents and brokers.
- Large real estate portals with home listings, especially Zillow, have provided misleading information about agent service quality and, in the future, could either benefit or harm consumers depending on the services they offer and how they structure these services.
“For several decades, the FTC and DOJ have done consumers a great service by monitoring, and when needed, promoting competition in residential real estate markets,” said Brobeck. “It is essential that the FTC and DOJ continue to closely scrutinize and object to anti-consumer practices, not just by traditional agents and brokers but also by large real estate portals,” he added.
Contact: Jack Gillis, 202-939-1018