Is Real Estate Anti-Competitive?

image: keys and contractI recently sold a house in a market where all brokers with access to the Multiple Listing Service required a 6 percent commission. The agents had signed agreements to charge a standard commission in order to have access to MLS. Local laws prevented rebating any portion of that fee. It seemed anti-competitive at the time, and I recall thinking how much easier it was to process online sales.

Now these practices are drawing new federal scrutiny. The Department of Justice has set up a website to promote competitive new forms of real estate brokerage, many of which are Net-based. The FTC has brought prosecutions against brokers for collusion against Internet-based brokers.

The real estate industry is reacting with alarm to the new scrutiny. “I’d rather pay 6 percent in commission than lose the biggest homeowner advocate in the world,” says Blanche Evans, publisher of Realty Times.

The Internet has brought profound changes to business models in the travel industry and journalism. This new attention to anti-competitive practices in real estate could open the door to accelerated restructuring in the real estate industry, or introduce new opportunities for competition.

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