Originally posted by @William Morgan:
I think the real question is how long can they sustain their inflated commissions?
In most other modern countries (EU, Japan, etc) commissions total 2-3% for the entire transaction, in the US they are 5-6% for the same level of service. The reason, as noted by several economists, is the NAR's legal cartel with one of the largest Political Action Committees in the US. The NAR spent $55 million in lobbying in 2014 ( the 2nd highest that year). All of this money is to ensure that the vast majority of property sales are channeled through their affiliates.
The apparent purpose of all that lobbying is to artificially limit who can be compensated in a RE transaction and what venues a RE transaction can take place.
Licensing is not administered by a government agency but rather a private entity who benefits from the licensed activity. A more obvious conflict of interest can hardly be found. Having the licensing authority benefit from all transactions that fall within its purview is the reason that real estate commissions are 200-300% higher in the US than elsewhere in the modern world.
That is why a listing agent can command 3% of your home price for listing a house on the MLS.
The free market wants to innovate. The NAR wants to defend it's monopoly. My money is on the NAR.
Inflated commissions? You're welcome to negotiate them w/ any agent, and then there are the flat fee services. I used to think agents were overpaid, but now that I am one, realize how much hard work we do behind the scenes. A couple of reasons why commissions may be higher in the US: (1) we have one of the most litigious societies in the world, and need to reserve more money for E & O insurance; and (2) we're also more geographically dispersed - I guarantee that a DFW-area Realtor drives a lot more miles than one in Tokyo or London.
Legal cartel? NAR is far from a monopoly, as joining is voluntary. Association dues aren't cheap, but they obviously provide enough value to justify joining for most agents. NAR does nothing to suggest pricing, in fact we're trained not to discuss pricing w/ other agents/brokers.
NAR and local affiliates are indeed politically active, but so far what I've seen locally is that their activities benefit all property owners - things like lobbying for caps on increases in property taxes. REALTORS aren't a protected class, and there's no incremental licensing to be a REALTOR. You can be a licensed agent, able to perform the same services as a REALTOR, but you probably won't have access to MLS, Realist, Supra keys, and other tools NAR provides to make agents more productive and educated.
As already mentioned, licensing is administered by the states, NOT NAR. You might want to do some research to clear up your many misperceptions about NAR.
