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FOR IMMEDIATE RELEASE CONTACT:
Date: May 9, 2005 Chris Christensen, V.P. Public Affairs
Homeowners Ask Realtors to Withdraw Anti-Consumer Rules
Expected Federal Antitrust Lawsuit will Reduce Real Estate Commissions
The American Homeowners Grassroots Alliance (AHGA) today called on the
National Association of Realtors to withdraw a proposed policy that
would stifle Internet real estate competition and cost many home sellers
and buyers millions of dollars in unnecessary commissions. AHGA is a
national consumer advocacy organization that represents the interests of
the nation's 75 million homeowners.
The U.S. Justice Department's antitrust division is preparing an
antitrust suit against the National Association of Realtors (NAR) over
its draft May 2003 policy that governs how brokers could display each
other's for-sale listings on virtual office Web sites. The NAR rules
would enable traditional real estate brokers, who typically charge
commissions in the range of 6%, from excluding “discount” real estate
brokers, who charge as little as 1% or less, from their consumer-facing
websites.
“If the Department of Justice is successful it will be a great victory
for home sellers and home buyers”, said Bruce N. Hahn, AHGA’s President.
“Internet competition has driven down the service costs in most other
brokerage businesses substantially. Consumers can now go online and save
significantly when they make airline or hotel reservations, or buy
stocks and bonds. With over 70% of home buyers now using the Internet in
their home purchase process, similar competition in the real estate
sector is long overdue”. he added.
The savings could be significant. With the median home sales price of
$188,833 in the first quarter of 2005, a 6% real estate sales commission
amounts to $11,324. In many urban and suburban areas the average selling
prices are near $500,000, and a 6% commission costs $30,000. With some
discount real estate brokers willing to list a house for a flat fee of
as little as $500 or less, home sellers who are willing to assume the
responsibility for the other aspects of the home sale, such as holding
open houses and conducting the negotiations, can save many thousands of
dollars.
AHGA is asking that NAR step aside from fighting new business models in
the real estate sector. “Homeowners should have the right to save money
on real estate commissions”, according to the AHGA President. “For many
home sellers savings are important. A young couple moving up may need
most of the equity in their current home in order to afford the new
home. For retirees selling the family home in preparation for a move to
new retirement quarters, the difference could be equally important.”
AHGA believes that there is room for many business models to flourish in
the real estate sector. Many consumers continue to prefer to use full
service stockbrokers and full service travel agents, and there will
always be a demand for traditional full service real estate brokers. By
focusing on what they do best, whether it is providing comprehensive
services or commission savings, real estate brokers can provide home
buyers and sellers the best value.
“The leadership of the National Association of Realtors will have an
excellent opportunity to reconsider their stand on this important issue
at their Legislative Conference in Washington DC this week”, observed
Mr. Hahn. “We hope they will take the opportunity to consider the best
interests of their clients. Without home buyers and home sellers there
would be no real estate brokerage business. As growing numbers of home
sellers and buyers opt for more cost effective real estate sales and
purchase models, it would be better if NAR decided to help make each of
these business models more efficient for their clients rather than
trying to fight the Internet age.”
The NAR event in Washington will also give real estate brokers the
chance to consider whether they want to carry on a number of similar
battles at the state level. In a number of states some traditional real
estate brokers are fighting Internet competition by seeking to pass
state laws or regulations that would require all brokers to offer a full
range of real estate services. The effect would be to force home sellers
to purchase services they neither want nor need. They would also tend to
keep real estate commission rates artificially high. The Justice
Department, with support from the Federal Trade Commission in at least
one state, has told the state legislators and real estate commissions in
those states that such laws or regulations would also be antitrust
violations. Both the AHGA and many real estate brokers, including some
traditional brokers who are unafraid of more competition, are opposing
the restrictions as well
Mr. Hahn concluded that “Consumers owe a great deal of thanks to the
Justice Department, the Federal Trade Commission and to President Bush
for their aggressive efforts to create more competition in real estate
services. Home equity is the greatest source of retirement6 savings for
most homeowners. Through these efforts to bring more competition, this
Administration is assuring that more Americans will have the savings
they will need in their retirement.”
AHGA is a national consumer advocacy organization that has been serving
the interests of the nation's 75 million homeowners since 2000. More
about AHGA is at www.AmericanHomeowners.org.
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