Real Estate Brokerage

How the Real Estate Cartel Harms Consumers and How Consumers Can Protect Themselves

Traditional real estate brokers perform a useful consumer service in facilitating the purchase and sale of houses and land. Moreover, they have established a “system” that is very convenient for home buyers and sellers.

Unfortunately, these traditional brokers also act as a price-setting cartel that maximizes their opportunities to charge a “fixed” commission of either 6% or 7%, depending on the local real estate market. Furthermore, in order to increase the chances of the “double-dip” – one broker collecting the entire commission – they often do not adequately represent the interests of their clients in searching for buyers or houses, or in securing the best prices on these houses – highest for sellers, lowest for buyers.

This report explains how consumers are disadvantaged by the current “system,” why the system serves the interests of traditional brokers, what reforms are necessary, and what consumers can do to protect themselves. It is based on information from dozens of real estate professionals and from hundreds of articles in journals, real estate publications, and the general press.

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