Daily Real Estate News  |  July 25, 2006  |   Broker Competition Fierce, NAR Testifies
With brokers operating almost every conceivable business model and negotiated sales commission rates at their lowest levels since 1991, according to independent industry analyses, the competition in residential real estate has never been more intense.

This fierce competition in real estate was front and center in testimony by the NATIONAL ASSOCIATION OF REALTORS® delivered Wednesday, July 25 at a U.S. House Financial Services Subcommittee on Housing and Community Opportunity hearing. The hearing sought to examine the changing real estate market and the development of the Internet.

Pat Vredevoogd Combs, NAR 2006 president-elect and broker-owner of AJS Realty in Grand Rapids, Mich., in testimony on NAR's behalf, detailed the increasingly competitive environment in which real estate professionals operate. Among the forces she cited as driving today's competitive real estate environment:

• Intense market fragmentation. Brokerage models have never been more varied, with NAR members representing full-service, limited-service, "discount," and Internet brokerages, among others. Competition among models will grow even more as home sales slow.

• Highly variable commission rates. The average commission rate dropped 16 percent from 1991 to 2004, according to the latest research from industry analyst REAL Trends. More decline is expected.

• Widespread availability of listings online. The number of real estate professionals with Web sites has increased 129 percent over the past five years, with 90 percent of these sites offering searchable listings.

• Hundreds of multiple listing services. More than 900 independently owned and operated MLSs, which enable real estate professionals to share listings with their colleagues, help foster competition by leveling the playing field between all types of brokerages — small and large, new and established, full-service and limited-service.

Vredevoogd Combs testified as part of a real estate industry panel that included Geoffrey Lewis, senior vice president and chief legal officer for RE/MAX International; Kimberly Gorsuch-Bradbury, senior vice president of Lending Tree; and Stephen Brobeck, executive director of the Consumer Federation of America.

Representatives from the U.S. Department of Justice, Federal Trade Commission, and the Government Accountability Office testified in a separate panel.

The Housing and Community Opportunity Subcommittee is chaired by Rep. Robert Ney (R-Ohio).

Full testimony from all participants, including Vredevoogd Combs, is available on the Financial Services Committee Web site.

— By Robert Freedman for REALTOR® Magazine Online

Read the official press release at REALTOR.org: NAR: Local Markets Drive Real Estate Competition