Their trade organization just lost a huge lawsuit. Their infamous commission model is under attack. And there are way too many of them. If they go the way of travel agents, will we miss them when they’re gone? SOURCES:Sonia Gilbukh, assistant professor of real estate at CUNY Baruch College.Kevin Sears, 2025 president of the National Association of Realtors.Chad Syverson, professor of economics at the University of Chicago.Lawrence Yun, chief economist for the National Association of Realtors. RESOURCES:"Heterogeneous Real Estate Agents and the Housing Cycle," by Sonia Gilbukh and Paul Goldsmith-Pinkham (NBER Working Paper, 2024)."Real Estate Commissions and Homebuying," by Borys Grochulski and Zhu Wang (Federal Reserve Bank of Richmond Working Paper, 2024)."The Relationship Between Home Prices and Real Estate Commission Rates: Implications for Consumers and Public Policy," by Stephen Brobeck (Consumer Federation of America, 2022)."The Relationship of Residential Real Estate Commission Rate to Industry Structure and Culture," by Stephen Brobeck (Consumer Federation of America, 2021)."Competition in the Real Estate Brokerage Industry: A Critical Review," by Panle Jia Barwick and Maisy Wong (Economic Studies at Brookings, 2019)."Hidden Real Estate Commissions: Consumer Costs and Improved Transparency," by Stephen Brobeck (Consumer Federation of America, 2019)."Market Distortions when Agents are Better Informed: The Value of Information in Real Estate Transactions," by Steven D. Levitt and Chad Syverson (NBER Working Paper, 2005).The Residential Real Estate Brokerage Industry, staff report by the Los Angeles Regional Office of the Federal Trade Commission (1983).
Full Episode
Today's episode is about an industry that, like many industries, often talks about how competitive it is and how that competition is good for customers.
The free market is working, and I think the consumer is benefiting while still receiving professional representation.
But if you ask most economists, they have a different view of this industry.
It's just hard not to say, man, these prices seem way higher than they need to be.
This is an industry that most of us interact with rarely. But when you do, the stakes are high.
It's a really important decision financially, emotionally. You need a little bit more hand-holding.
But is your hand being held or is it being forced?
I take great offense at that characterization.
Offense noted. But also worth noting, the National Association of Realtors, the NAR, just settled an antitrust lawsuit that requires it to pay hundreds of millions of dollars in damages and change the way realtors charge their customers. Today on Freakonomics Radio, we speak with the president of the NAR as well as its chief economist.
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