Antitrust Implications of Home Seller Outcomes when using Flat-Fee Real Estate Agents
نویسندگان
چکیده
In stark contrast to other agency-based consumer service industries, real estate agents have been remarkably effective at maintaining margins and market share. One possible explanation for the success of real estate agents is collusion, and consequently the industry is facing regulator scrutiny. In this paper we first consider the mechanisms through which collusion might be sustained. Although the industry’s low concentration makes collusion harder to support, the involvement of both a seller’s agent and a buyer’s agent on a given home sale helps facilitate collusion. Selling agents need buyer’s agents to deliver customers. Not only can fullcommission agents collude against discount/flat-fee agents by steering their buyers away from such listings, they also can use the same punishment on other full-commission agents who cooperate with discount agents. Using data from three markets, we find that houses listed using flat-fee agents have longer expected times-to-sale than observably similar houses sold by fullcommission agents, but ultimately sell for similar prices. These results are consistent with allegations that traditional agents steer clients away from flat-fee-listed homes, although we consider other possible explanations. We calculate that, even taking into account the longer expected time to sale and the increased effort of the homeowner, sellers who use flat-fee agents saved an average of over $5,000 compared to hiring a full-commission agent. This casts doubt on the necessity of minimum-service laws that exist in several states and are being considered in others.
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