Competition and Real Estate

The Importance of Competition in Real Estate to Consumers

Buying or selling a home is the largest financial transaction most Americans will ever undertake. The median priced home cost $184,334* in 2009, and the median commission paid to real estate brokers came to $9,733**. Overall, Americans paid nearly $60 billion for brokerage services.

* Inflation-Adjusted Median Home Sale Price based on data for the first half of 2009
**Inflation-adjusted median commission based on data from the first half of 2009.

• Home prices and commissions over time
• Competing models of real estate brokerage

More Competition Could Reduce Commissions

New business models are emerging that allow consumers to save thousands of dollars when they buy or sell a home. Where these practices are allowed, some buyers’ brokers are offering refunds on commissions, and some sellers’ brokers are charging only for services actually used.

• Consumers can save thousands of dollars in commissions
• Calculate how much you can save

Barriers to a More Competitive Brokerage Market

Ten states forbid buyers’ brokers from rebating a portion of the sales commission to the consumer. Eight states require consumers to buy more services from sellers’ brokers than they may want, with no option to waive the extra items. HUD recently clarified its rule that rebates are permissible under RESPA as long as they are reported on the HUD-1 form.

• What are the laws in your state?
• Buying? State laws on rebates increase prices

• In 2010, New Jersey repealed its ban on commission rebates. New Jersey now permits brokers to offer their customers rebates.

• HUD explains that rebates are permitted by RESPA
• Selling? State laws on brokerage services increase prices

Other Problems Consumers Face

Some states require real estate closings to be done by lawyers, reducing competition and raising costs. Competition also suffers when brokers exclude low-cost rivals from the multiple listing service (MLS), which limits price competition.

• Laws that raise closing costs
• Anticompetitive MLS practices

Additional Resources

Government hearings and reports on competition in the brokerage industry

Competition in real estate: Questions and answers

Department of Justice enforcement actions to protect competition

How to Contact the Antitrust Division

If you have questions or comments about competition in the real estate industry or if you have information concerning anticompetitive conduct, e-mail the Antitrust Division.