Highlights from DOJ-FTC Workshop on Real Estate Competition

National Assn. of REALTORS® (NAR) general counsel Katie Johnson was among a distinguished group of panelists at the What’s New in Residential Real Estate Brokerage Competition workshop on competition in real estate, sponsored jointly by the Federal Trade Commission and Department of Justice. The workshop focused on developments since the publication of the FTC/DOJ Report on Competition in the Real Estate Brokerage Industry in 2007.

Highlights from the 2018 FTC/DOJ Workshop

Simon Chen – president & CEO, ERA Franchise Systems, LLC:
There was a number that’s being bandied around in the industry right now that are saying that non-traditional “brokerage models” now are the majority in the marketplace, and that’s sort of what we feel as well. So, whether you look at the real trends data or you look at Swanepoel’s research and you just add up the “traditional companies” versus the new hybrid…or non-traditional companies or what have you…it seems like that tipping point has actually been reached in the marketplace.

Eric Eckardt – U.S. CEO, Purplebricks:
I think as we go forward over the next three to five years, you’ll continue to see pressure on pricing, you’ll continue to see more efficiency, more convenience and more value all to benefit the consumer — which should really be everyone’s North Star in this room. Whether you’re with an MLS Board, a franchise, an independent, that should really be our primary mandate is provide great value and service to the consumer.

Luke Glass – EVP of Industry Platforms, realtor.com®:
Undoubtedly, the consumers are more enabled today than they were 10 years ago, and I think the processes that have come out through platforms…like ListHub, increases in MLS feeds, and the way the MLS standards have evolved…have really powered this idea of a more educated consumer over the last 10 years. They come armed with more information, and yet they are still using REALTORS® at approximately the same rate they have for the last 10 years.

Art Carter- CEO, Calif. Regional MLS:
Really, the vast majority of information that the consumer really needs and wants can be delivered through a IDX feed, or in the portal’s case, feeds that are built off of that IDX information. I don’t think there’s been any lack of innovation being allowed across the spectrum from data delivery, based off of the information that’s being provided on the IDX side, or the feeds that our portals are getting.

Glenn Kelman – CEO, Redfin:
The only problem I have is when you give listings to websites that don’t give listings back, because then you fragment the market, you create disincentives for sharing, and you prevent buyers from seeing all the homes for sale. They have tremendous anxiety that they’re not seeing all the homes for sale.

Katie Johnson – NAR, General Counsel:
MLS is the envy of the world of regulators and countries across the world. They recognize the pro-consumer benefits of having an orderly marketplace, where all the information is located. There is price competition in that there is varying business models, and that consumers are understanding that there is not a fixed commission; in that it is either negotiable or you can choose a flat rate versus a percentage commission.

So, I think that that was a good illustration of price competition…and I agree with Panle [Jia Barwick at Cornell Univ.] that it should be studied, and it should be evaluated. And we should care about this because we the real estate brokers, and agents want the best experience for consumers just like everybody else does.

But, you should use that information that’s happening today. The studies shouldn’t look back at 2005 or before that didn’t have these varied business models that we’ve learned about.

Brian Larson – assoc. professor, Texas A&M Univ. School of Law:
I would expect that any business we can think of probably has points of friction. I think continuing to study what those points of friction are, and identifying potential places where we can approve practices is always a good idea. I’ll just sort of reaffirm the comment I made, and then I think that Panle just echoed; it would be good to have lots of information, and lots of knowledge about why we’re making changes if we’re making changes.

So, a knee jerk reactions to anecdotal stories, which is some of what we’ve heard here today. Or, under-tested solutions to problems that are identified based on theoretical, or empirical perspectives that are limited in their scope they come with risks. And so, we need to think about what those risks are and make sure we’re not throwing the baby out with the bathwater.

Related resources:
Highlights from the DOJ-FTC Workshop on Competition in Real Estate (video)
Competition in Real Estate – National Assn. of REALTORS®
2018 FTC-DOJ Workshop Speaker Bios

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