Brick & Mortar Brokers Accused of Muscling Online Real Estate Firms
Conventional real estate firms are trying to squeeze out online brokers using legislation and anticompetitive tactics, the Consumer Federation of America (CFA) said Wed. at a news conference. Online home-selling businesses have multiplied in recent years, with RealEstate.com and ZipRealty doubling their business, CFA said.
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Internet-based real estate companies offer a la carte services; traditional brokers tend to do everything for the customer, CFA said. ForSaleByOwner.com acts as an online hub buyers and sellers can use to communicate directly, charging $90 a month for listings. Consumers can look up house values and neighborhoods on Zillow.com. RealEstate.com refers buyers and sellers to agents.
Many full service brokers probably feel threatened by new online business models that give consumers more control, CFA said: “The ferocity of the traditional broker attack is stoked by a huge glut of agents who feel they can survive only by maintaining high, fixed commissions and the possibility” of commissions from both buyer and seller -- “double dipping.”
Traditional brokers accuse upstarts of unethical practices, incompetence and “whoring,” at conferences, in ads and on blogs, CFA said without citing specifics. Some entrants say they have had trouble getting Realtor association memberships required for access to the local Multiple Listings Service. DoJ sued the National Assn. of Realtors in U.S. Dist. Court, Chicago, calling the practice unfair and anticompetitive (WID Nov 30 p5).
Traditional brokers “use state regulators as a weapon,” shaking hands and twisting arms to get laws passed, said CFA Exec. Dir. Stephen Brobeck. Some state laws require real estate brokers to provide a minimum service level incompatible with most online brokers’ business models, American Real Estate Broker Alliance (AREBA) members told reporters. Some states bar commission or fee rebates, offered by many online brokers. States must “supplement” federal efforts “to promote a free, non-discriminatory residential real estate marketplace,” CFA said. MLS4owners.com President Chris Nye said his company hired a staff attorney to fight anticompetitive tactics. Duffy Realty co-founder Rhonda Duffy uses her Atlanta radio talk show to promote the consumer benefits of her business and its counterparts, she said.
But the line drawn by CFA between so-called “traditional” and “non-traditional” isn’t so clear, NAR Public Affairs Vp Steve Cook told us. Most agents -- full service or not -- have websites and many brokers who spoke at the CFA press conference are Assn. members. “There’s intense, healthy competition among everybody in our business,” he said. Thanks to the Internet, “consumers can find someone to help them do whatever they want,” he said.