Maybe I misunderstanding the suit, but where's the price fixing? Real estate agents have the ability to charge whatever commission they want, just as buyers have the ability to choose whatever agent they want So, where's the problem? Agents that charge 6% get less business but make more money. Agents that charge 2% get more business but make less money. Nobody is forcing agents to charge 6%, but Something is obviously working if people still use those agents. It's a simple price vs. volume/Quality vs. Cheese-ball decision...capitalism, not price fixing.
I once asked a realtor in Chicago if he would negotiate on the 6% commission charged by his firm. He told me he could do that, but then no other real estate brokers in town would do business with him. So in other words, if a firm tries to undercut the standard commission rate on their listings, all of the suden no buying agents from other firms will be to keen on showing those listings to their clients. This is what is called collusion, and yes it is illegal.
======= Godd points in that most business people dont like to give up profits also actually 0f Ron Mexico 1.5%+1.5%+1.5% +1.5% [=6%]some of that can be negotiated. But Broker/agent dont like to give up profit, yes on 8 million most would/should . Pay peanuts ; get monkeys. Sold some property by owner; hardest money ever made, not to mention undesirable/lookers dropping by withourt appointment. And like Jem implied they get commercial ad rates; it pays to specialize with a Realtor unless you like interupting your trading for ''lookers'' & ''unqualified lookers'' Dont move the ancient boundary marker-Solomon,trader king
It is not illegal if you, as an agent, decide that you are not going to take a cui in your commission by showing your buyer a property that will give you a lower commission. That's capitalism. You have the right to make that choice. And if you are a homeowner who wants to save a few dollars and finds an agent who will take a lower commission, well, you get what you pay for. And don't expect other agents to come rushing to your door. Why should they?
It is collusion if brokers talk about it over a beer or at a convention. When I sold realestate many years ago we had meetings about the antitrust laws and were told price fixing was illegal and not to discuss commisions with each other or other agents. But the rate was set at 6% at our office and we could not list for less. We were discouraged from showing or selling houses listed for less even if the payout to our firm was the same 3%. The agents don't set the rates the brokers they work for set the rates for the companies. And thats probably what the investigation is about. Do the brokers have an agrement not to cut rates, even an unspoken, wink wink agrement is illegal. Where I live a town of apx. 200,000 people it dosn't take many of the large brokers to agree to keep rates @ 6%. Probably 10 of the largest brokers have a majority of the business run through their companies and controll a large % of realtors.
I find a property, ask my agent to negotiate, agent finds that commission is low, and comes back saying that property is in escrow. Anything wrong with this picture? well happens all the time.
All the guys that stood up in favor of the real estate industry are free to pay, for instance, $30,000 on a $500,000 house. You pay $30,000 for someone saying, "This is the kitchen", "This is the bathroom". In this hyper-competitive economy, I've told my wife that if she ever wants to go back in to the work force, there is only one area of low-hanging fruit left in this economy - real estate agent. We know a girl who is a high school graduate and a millionaire from selling houses! You guys that like to pay more - you are very wise. I'll PM you when my wife get her real estate license. Paying more is good!
Why is the commission 5-6% in the US? That sounds extremely high, is there some kind of barrier to entry in the real estate agent business?