Inman is a real estate industry news site and about 6 weeks ago they ran an interesting story about a panel discussion in which a "Brokerage CEO slams Purplebricks over low-commission model". The CEO in the spotlight was Steve Games, the CEO of Pacific Sotheby’s International Realty, and the story was about how he went on a tirade about discount real estate commissions and the need for realtors to hold the line on commissions. A lot of what he said was implicitly targeted against Purplebricks, an international flat fee brokerage whose CEO was another panelist on stage.
According to my real estate and business training this is forbidden territory because it amounts to an invitation to competitors to collude on real estate commission - i.e. pricing - which is an anti-competitive move. It violates the antitrust laws. So how could this guy do this?
Keep in mind that the Federal Trade Commission has kept a really close eye on the real estate industry for decades. Here is their page on the topic with a ton of resources: Real Estate Competition | Federal Trade Commission. So real estate training always contains a discussion of how to stay out of trouble and what this guy said sure looks like trouble to me.
You can watch the video here and decide for yourself. Steve Games starts talking at 13:00 minutes, he tells the audience to hold commissions at 15:45, and he tells them not to start with a discount at 17:00. One of the more amusing moments comes when he starts out by asking the audience to stand up if they feel like they got paid more than they earned on their last real estate transaction. We can't see the audience but presumably nobody stood up. Of course, we've been across the table from many, many realtors that we felt made more than they earned on a transaction.
I found the whole tirade rather amusing. Old school realtors are going down kicking and screaming as smart consumers look for more rational alternatives to the traditional real estate model. They know the writing is on the wall for their fat paychecks.
Gary Lucido is the President of Lucid Realty, the Chicago area's full service real estate brokerage that offers home buyer rebates and discount commissions. If you want to keep up to date on the Chicago real estate market, get an insider's view of the seamy underbelly of the real estate industry, or you just think he's the next Kurt Vonnegut you can Subscribe to Getting Real by Email using the form below. Please be sure to verify your email address when you receive the verification notice.