Oppler: Industry expert rebuts – Realtors® put consumers first

Oppler: Industry expert rebuts – Realtors® put consumers first

October 18, 2021 Off By administrator

The editorial board piece titled “Realtors must embrace fair rules of competition” is replete with inaccuracies and mischaracterizations about local broker organizations, Realtors and the American real estate industry. In fact, local broker organizations ensure equity, superior customer service and greater options for buyers and sellers. The National Association of Realtors regularly reviews guidelines to maintain practices that increase transparency and improve the consumer experience.

The latest example of advancing positive change is an NAR committee having recently passed motions that more explicitly state the spirit and intent of NAR’s Code of Ethics and MLS guidelines in some key areas. The guidance reinforces greater transparency and disclosure of compensation offered to buyer agents, ensures that listings aren’t excluded from search results based on the amount of compensation offered to buyer agents, and  reinforces that local MLS market participants do not represent brokerage services as free.

The opinion piece suggests another change that would have many unintended consequences: uncoupling commissions and requiring buyers to pay commissions to their brokers. The Boston Herald says this would lower costs when it would, in fact, have the opposite effect. In this scenario, transaction costs would increase for buyers, particularly first-time and low-income homebuyers. Requiring buyers to pay a commission, which can’t be included as part of a mortgage, would increase their out-of-pocket expenses and freeze many out from an already competitive market.

Or buyers would be forced to forgo professional help during what is likely the most complex and consequential transaction they will make in their lifetime. That’s hardly consumer-friendly, especially when 91% of home buyers say they would engage their real estate agent again or recommend them to others. Leaving buyers to fend for themselves would take us back to the old days where the seller controlled the transaction in a “buyer beware” environment.

The Boston Herald piece also grossly mischaracterizes commission norms in other countries, when the American model has, in reality, long been viewed as a best practice for consumers. First, the American approach consolidates and simplifies the process. In other countries, like Ireland and the United Kingdom, fragmented markets make purchasing a home highly inefficient and complicated.

Second, the fragmented models of other countries freeze out smaller brokerages and limit competition. The 88% of Realtors who are small business owners (approximately 1.3 million), a majority women-owned, would have a hard time staying afloat in other countries. In markets abroad, large brokerages are the ones with the resources and much larger sets of listings to compete in fragmented broker markets. The whole point of American local broker organizations is that everyone has equal access to the same set of listings, which levels the playing field…

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