Monday, October 22, 2007

Wandering through the DoJ website

What is it going to take to make them happy? Did someone at the DoJ have an unsatisfactory experience with a real estate agent? Or is it simply that they know our approval ratings are down there with our Democrat led Congress (which would love to have even the dismal ratings of George W. Bush), so we are an easy target?

There is an interesting report called "Competition in the Real Estate Brokerage Industry" that is a pretty interesting read... ok, not that interesting as a read, but interesting to look through because of the way things are presented. I'm going to give my personal impressions after spending the morning looking through it online.

  • They really don't like full service brokerage. At every opportunity the report bashes full service brokers.
  • The data that they use often contradicts what they are trying to point out. Some examples of this would be that there isn't sufficient competition in the industry either at the brokerage level or at the sales agent level. But, the report begins by stating that there are no significant barriers to entry to the sales agent level, and few barriers to entry for the brokerage level. It also states that there is a lot of fluidity in the industry. Finally, it states that competition is fierce... but apparently not fierce enough, because it says that competition is needed to bring prices down for consumers.
  • More and more consumers are choosing to utilize full service brokerage models... even though there are more brokerages offering other than full service options.
  • There are very few mentions of limited service brokerages offering fewer services for consumers... but plenty of mentions of consumers saving money by utilizing flat-fee or limited service brokerages.
  • Commission rates have been going down, but not fast enough for the DoJ. Because home prices were rising, average commissions were still increasing. But, because of the low barriers to entry, the increased competition led to the pie being split more ways. One has to wonder if the DoJ wouldlike to see more agents (more competition) or fewer agents (less competition, but perhaps ?more reason to cut commissions?).
  • The DoJ asserts that the MLS is imperative to consumers, but decries the fact that it is owned privately.

I was really disappointed. There are so many contradictions, yet in EVERY case, the DoJ asserts that the real estate industry is flawed. The price that is agreed, even though there is fierce competition from many players, must not actually be fair... and is a result of a restraint of competition. The restraint of competition is because there are too mazny competitors...

It goes on...

I think there is someone at the DoJ that dealt with a crappy agent and has decided to go after the entire industry.

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