Source: REALTOR® Magazine Online
(September 30, 2005) -- Responding to an editorial in The Wall Street Journal that suggested real estate practitioners suppress competition in local markets, Richard A. Smith, chairman and CEO of Cendant Corp.'s Real Estate Services Division, wrote a letter to the editor about just how competitive the industry is.
In the original editorial "Justice v. REALTORS®" on Sept. 14, the Journal's editorialists wrote in reference to a lawsuit filed by the U.S. Department of Justice against the NATIONAL ASSOCIATION OF REALTORS® for its Internet listings policy:
"Justice is certainly correct that the REALTORS® have used their political clout to suppress competition in local real-estate markets. One charming legal barrier in about a dozen states—called 'minimum service requirements'—prohibits such discount realty firms as realestate.com from offering homesellers a flat fee of typically $500 to post their houses on local sale listings. In today's booming market, with the median-priced home now selling at $220,000, the Internet-based firms can save "do-it-yourself" consumers about $10,000 on average in exorbitant REALTOR® fees. Another REALTOR® favorite are state laws that prohibit discount agents from providing rebates to homebuyers of typically $1,000 or more on their fees."
Smith's response to the editorial, which was published Thursday in The Wall Street Journal, countered that the "government should not get involved in dictating to REALTORS® and homeowners" how marketing plans should be implemented.
"The industry is already extremely open to competition," Smith writes. "It establishes a fair price for its services and then markets its products to the competition, sharing 50 percent or more of its fee to attract buyers. And it voluntarily makes its inventory available to competitors, empowering them to avoid the costs and infrastructure to produce their own inventory.
"In the end, the homeowner decides whether the price/value proposition meets his or her needs. Sales associates are almost always independent contractors, and all commission fees are negotiable. A highly efficient marketplace determines what is acceptable. Real estate commissions have been declining for over 10 years, and the national average is 5.1 percent."
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(September 30, 2005) -- Responding to an editorial in The Wall Street Journal that suggested real estate practitioners suppress competition in local markets, Richard A. Smith, chairman and CEO of Cendant Corp.'s Real Estate Services Division, wrote a letter to the editor about just how competitive the industry is.
In the original editorial "Justice v. REALTORS®" on Sept. 14, the Journal's editorialists wrote in reference to a lawsuit filed by the U.S. Department of Justice against the NATIONAL ASSOCIATION OF REALTORS® for its Internet listings policy:
"Justice is certainly correct that the REALTORS® have used their political clout to suppress competition in local real-estate markets. One charming legal barrier in about a dozen states—called 'minimum service requirements'—prohibits such discount realty firms as realestate.com from offering homesellers a flat fee of typically $500 to post their houses on local sale listings. In today's booming market, with the median-priced home now selling at $220,000, the Internet-based firms can save "do-it-yourself" consumers about $10,000 on average in exorbitant REALTOR® fees. Another REALTOR® favorite are state laws that prohibit discount agents from providing rebates to homebuyers of typically $1,000 or more on their fees."
Smith's response to the editorial, which was published Thursday in The Wall Street Journal, countered that the "government should not get involved in dictating to REALTORS® and homeowners" how marketing plans should be implemented.
"The industry is already extremely open to competition," Smith writes. "It establishes a fair price for its services and then markets its products to the competition, sharing 50 percent or more of its fee to attract buyers. And it voluntarily makes its inventory available to competitors, empowering them to avoid the costs and infrastructure to produce their own inventory.
"In the end, the homeowner decides whether the price/value proposition meets his or her needs. Sales associates are almost always independent contractors, and all commission fees are negotiable. A highly efficient marketplace determines what is acceptable. Real estate commissions have been declining for over 10 years, and the national average is 5.1 percent."
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