Whenever I see a Realtor set their listing commissions at 0.95% vs 1%, or buyer rebates at 51% vs 50% this is not gaming the system, this is competition at work. Competition among Realtors results in lower costs of buying and selling homes, as well as better customer UX.
Sure, one might say that a Realtor does this as a “trick” to be shown ahead of competing Realtors with nearly identical pricing, but I see it as an opportunity to deliver a message to consumers that pricing does matter.
There is, of course, another side to setting prices where a third party does it for the Realtor.
In a hub-and-spoke type price-fixing conspiracy, all prices for Realtors are typically set exactly the same. Moreover, instead of competing for consumers with lower pricing, the Realtors in the hub are really competing for placement based on how much in kickbacks the hub is expecting to receive.
“In early 2016, we changed the pricing and structure of the Redfin Partner Program. Instead of paying 15% of the commissions’ partner agents earned through the program to us, partner agents began paying us 30%. At the same time, we began directly issuing a $500 check to certain partner program customers, partially offsetting the increase in referral fees paid by partner agents.”
Redfin’s most recent statement on the company’s website reads: “Since Partner Agents aren’t employed by Redfin, we can’t guarantee our 1%–1.5% listing fee or offer a Redfin Refund for customers who work with a Partner Agent.”
There are several of problems with fixing rates for competitors and allocating consumers to those same competitors, primarily, a lack of genuine competition. That 0.05% listing savings or 1% extra in buyer rebates may seem irrelevant, but, it is, in fact, the fragile force of competition at work.
With absolute certainty, Glenn Kelman has committed wire fraud by transmitting collusion with competitors on the Internet.
Redfin Partner Program is unlawful, but it has not been exposed by the industry because the entire industry is complicit. The scheme relies on an illicit referral network of over 11,600 Redfin Partner agents.
Redfin Partner Agents are independent Realtors firmly affiliated with various brokerages such as Berkshire Hathaway HomeServices, eXp Realty, Windermere Real Estate, Keller Williams Realty, Inc., RE/MAX, Coldwell Banker, NextHome, Inc., HomeSmart, Compass, John L. Scott Real Estate, CENTURY 21®, Realty ONE Group, Vylla, ERA Real Estate, Weichert, Realtors, Better Homes and Gardens Real Estate, Fathom Realty, Intero Real Estate Services, John R. Wood Properties, Worth Clark Realty, Sotheby’s International Realty, etc. What do any of them have anything to do with Redfin?
As always, it takes an outsider to break the status quo.
Related to: Redfin Partners, antitrust, price fixing, wire fraud, kickbacks, RESPA, Sherman Act, FTC Act, market allocation, consumer allocation, false advertising, unlawful kickbacks, wire fraud, price-fixing practices, 18 U.S.C. § 1346, 18 U.S.C. § 1343, 15 U.S.C. § 1, 15 U.S.C. § 45, 12 U.S.C. § 2607, C.F.R. § 1024.14