What Is So Different about Today? Conclusions and Lessons for the Future
Leveraging this Knowledge for Strategic Advantage—Conclusions and Directions Forward
—The Story of the Multiple Listing Service, the U.S. Supreme Court, the U.S. Department of Justice and Redfin
Have you ever bought or sold a home or any real estate? If you answered yes, the following story should sound familiar. You work with an agent who plays all roles, from finding listings and showing you a house to negotiating on your behalf. For this service, the agent receives a fixed fee as a percent of the sales price no matter what they do or how good or bad the service they perform. Thus, we begin with an almost century-old convention—the 6 percent real estate commission and multiple listing service.
Real estate brokers, who have earned a fixed fee of 6 percent of the purchase price for the past 70 years, typically facilitate the buying and selling of real estate. This standard commission amount came into being in the 1940s when the local Realtor boards openly colluded on rates. The U.S. Supreme Court declared in the 1950s that this was in violation of antitrust laws, so the Realtors adopted “suggested fees.” Then in the 1970s, Department of Justice lawsuits banned the suggested fees as well, so the ...