Competition in the Real Estate Brokerage Industry - #13

This section of the DOJ/FTC report puts forth two ways that real estate brokers compete, the Service Dimension and the Price Dimension. The Service Dimension is just one paragraph mentioning varying services to Buyers and Sellers and the different marketing and advertising methods. I'm not sure how to take this part of the last sentence "...; and giving away pumpkins at Halloween" Perhaps a statement of promotional give-aways could have been stated with a little less attitude, but it might point out some bias among the government employees producing the report. Or maybe I'm just too sensitive, and upset that I hadn't thought about pumpkins for closing gifts.

Competing on the Price Dimension gets a great deal more text, with the beginning statement: "Competition among brokers on price primarily occurs through lower commission fees and rebates." I'm beginning to wonder why the banks are trying so hard to get into a business that they think should be cutting fees. This statement from the American Bankers Association: "Some commenters observe that the relative inflexibility of commission rates coupled with rising home prices has caused consumers to pay more in commissions, and that if brokers competed more on commission rates, commission fees would be lower." It probably wouldn't be appropriate to suggest that the bankers might have an interest in disparaging the industry.

There's no intent here to defend the inflexible application of a fixed commission fee with the justification of "full service" attached. However, more choice than ever exists for consumers and the choices grow almost daily. My recent post on the ACRE™ Designation is an example. Perhaps, like many things in our capitalist society, by the time the government gets around to attempting to legislate it, the marketplace will have solved the problem.

Entire series: #1, #2, #3, #4, #5, #6, #7, #8, #9, #10, #11, #12, #13, #14, #15, #16, #17, #18, #19 & final