The Real Estate Cartel Controls the Market? Is it True?
June 19th, 2006 • Related • Filed Under
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The Consumer Federation of America today issued a report charging the major real estate companies act as a cartel in their brokerage fees and the services they offer the consumers. This will be an interesting thing to watch, but in reality these folks are just looking for attention in my opinion.
They just know that a large part of the population is looking at the real estate market and know that this is a great way to get headlines.
The CFA charges that consumers are harmed in three main ways:
- Traditional brokers charge high, uniform prices regardless of the quality of the broker involved. Even a newly licensed, inexperienced agent receives the same commission no matter what the level of service offered.
- Traditional brokers who work with both seller and buyer in a home sale almost always function as facilitators. Brokers try to make sure a sale is completed (and they get paid), rather than as fiduciary agents acting in the best interests of their clients, as the brokers claim to do.
- Brokers “double-dip,” promoting their own listings or the listings of their firm over properties better suited for their clients.
A spokesperson for the National Association of Realtors did not return calls for comment.
Real estate industry members act as a cartel - Jun. 19, 2006.
Am I the only one that finds it odd that the ONLY place that looks to be seriously warming is ...
It seems there are numbers posted about how much it could cost the US in home sales from people holding ...
The only people holding off will be those that are financially secure and can manage to hold off. How ...
What an awesome way to generate traffic for a story. Were they trying to time that for Sweeps Week? ...
That's awful. I wonder if using that tactic , if a building can be sold or used as collateral. ...
Good point about people possibly holding off now. The 4.5 percent interest rate could be a self-fulfilling prophecy. 
wow this is a wonderful creation...............i would like to be there once even in my life time........... 
Absolutely agree with Jon, excellent site and very imformative. Keep reporting to us please! 
I will say that had I never been to that site and seen Dean's many deals that he documented and ...
Great Real Estate
post ... very interesting. 
Comment by Condo Renege on 19 June 2006:
Check out http://www.condorenege.com and see how buyers are banding together to get a new fair purchase price from builders.
Comment by tl on 19 June 2006:
They’re just looking for attention huh?
For what it’s worth here’s my personal experience from my two home purchases:
The first was in 1991. We bought a house from a couple who had lived there a year. They paid $70k in 1990. The following year they listed it at $81k. There was nothing in the list of amenities to indicate they had made any significant improvements on the property. When negotiating a price the broker said the sellers were “entitled” to at least enough to pay for the commission. We replied they were “entitled” to get what ever the market would pay, and the house had been on the market for a couple of months. We ended up paying $77k, and in retrospect should have (and probably could have) paid less.
In 1996 we sold that house and purchased a home owned by a real estate agent (she had been renting it out). After negotiating a purchase price of $129k we gave her the listing for our place. That took weeks because she would never quote us a price on the other place. I think in the end she realized we had to make a deal on the new place before we would give her the listing for the old one. The appraisal came in at $92k for the old house. This was after the agent had set an asking price of $98.5k. She went to the appraiser (a person who is supposed to be neutral) and successfully lobbied to get the appraisal up to $98.5k. She told us “nobody ever messes with my price”. We sold it in 2 days for $98k. It turned out to be the only offer we got. My guess is if the buyers would have negotiated they could have forced us to lower the price by several thousand, probably close to the $92k.
Then, after we signed a purchase agreement for the new house at $129, but prior to closing, the agent listed it for sale in order “to drum up business”.
We were happy with our purchase, and still live in the house. But from our experience, real estate brokers definitely help to drive up the selling price of a home. If you are the seller that’s great, not so if you are the buyer. You have to know enough to be able to walk away from a deal if you think you are going to pay too much.
So, there is more to the price of a home than simple “market forces”. The real estate people are very good at tweaking those forces in their favor. I would rate them in the same category as car salesmen.