As an industry with well over $100 billion of commission revenues that serves six million new and used-home sales annually, the real estate brokerage industry has recently attracted well-deserved attention from both private investors and public agencies which open up real estate industry and competitors.
One of the most exciting trends in this industry is the entry and expansion of tech companies that have the potential to improve efficiency significantly. Thus, this is a propitious moment to reflect on frictions that have existed in this industry and experiment with market design and changes that could improve market efficiency, not only through importing design features from other countries, but also by considering innovations that firms are bringing to markets, all of which offers exciting opportunities.
REALTORS are mostly small business owners who work to ensure buyers and sellers have the greatest access, transparency and choice through independent, local broker marketplaces that level the playing field for all types and sizes of brokerages.
Independent, local broker marketplaces create highly competitive markets that are friendly to small businesses and new market entrants.
The process of buying a home is stressful in its best moments and absolute hell in its worst. To avoid the most hellish parts, nearly 30% of all home buyers and sellers turn to real estate companies to assist them in the demanding activity.
The real estate industry goes even farther than residential home-buying. There are many kinds of properties that real estate companies can own and invest in to earn them a sizable return.
Types of real estate properties include:
Residential
Commercial
Industrial
Land
Real estate is also distinguished by whether a company constructs, buys, or sells its property.
It’s a market with a huge potential for earnings, considering that there were 6 million residential homes sold in 2019 in the United States alone. The industry’s lucrative potential has encouraged a lot of real estate companies to break in.
While there’s a lot of competition
The Agencies should continue to monitor the cooperative conduct of private associations of real estate brokers, and bring enforcement actions in appropriate circumstances. While cooperation among brokers through a multiple listing service can provide consumers with important efficiencies, cooperation used to adopt rules that hinder rivals can be anticompetitive and, as recent Agency actions indicate, may violate the antitrust laws. The Agencies should continue to provide state legislators and industry regulators with information concerning the competitive consequences of state legislation and regulations that threaten to or already do restrict competition and consumer choice in the real estate brokerage industry, and take enforcement action in appropriate circumstances.State legislators and industry regulators should consider repealing existing laws, rules and regulations, such as minimum-service and anti-rebate provisions, that limit choice and reduce the ability of new brokerage models (e.g., fee-for-service brokers, discount full-service brokers, virtual office website brokers, and broker referral networks) to compete and that do not appear to provide any consumer benefits that would justify such restrictions. They should also avoid enacting such laws, rules, and regulations in the future. The Agencies and industry regulators should promote consumer understanding of marketplace options. Some consumers may not be aware of the range of alternatives available to them when hiring a real estate broker, including the types of business models available and the negotiability of fees, for both home buyers and sellers, and/or may not understand the duties owed by their broker. Competition in the real estate brokerage industry would likely be enhanced if consumers had better access to information.
