July 26, 2006
Through a combination of industry rules and recently-enacted state laws, major real estate brokerage firms and the National Association of Realtors (NAR) are thwarting innovative, Internet-based real estate businesses that could bring real change to a business that is inefficient, anticompetitive and anticonsumer, says USA Today.

In the past two years, industry lobbyists, the NAR and local Realtor boards have used their clout with state legislatures to wall themselves off from competition, the newspaper reported.

The findings follow a report by the Consumer Federation of America, which found that state real estate commissions are dominated by practicing real estate brokers, who have used their clout to block competition and consumer choice.

Some of their increasingly blatant tactics include:

• Pushing for minimum service requirements that essentially ban no-frills brokerages by mandating a long list of services that agents must provide, regardless of whether clients want them.

• Bans on buyer discounts that bar discount brokers from rebating some of their commissions to their clients; some start-up companies have used this practice as a way to break into a market.

• Attempting to prohibit discount brokers from fully accessing Multiple Listing Service (MLS) listings, which pool the listings of multiple firms in a given area.

Some in the industry say the restrictions are necessary to protect consumers from unscrupulous or incompetent Internet start-ups, says USA Today.

But while it is true that some of the firms that have come and gone have been poorly conceived, undercapitalized or downright shady, that happens in every new industry and is no reason to crush it, the paper said in an editorial.