618. Are Realtors Having an Existential Crisis?
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Freakonomics Radio
01-17 19:0048
全文概览
The dialogue delves into the real estate industry's competitive landscape and the perceived discrepancy between service quality and high commission rates, around 6%, which has remained unchanged despite rising home prices. Critics, including economists and industry observers, argue that these rates may not accurately reflect the value provided to consumers, and the competitive nature of the industry may not be as healthy as claimed, with potential anticompetitive practices among professionals. The National Association of Realtors (NAR) has faced significant antitrust litigation, including a $418 million settlement in Missouri, acknowledging issues with commission practices while denying any wrongdoing. The settlement mandated changes in commission communication and handling, suggesting tacit collusive activities within the industry. Economists and insiders propose reforms, advocating for lower, more negotiable commissions that better align with the value provided, possibly shifting from fixed percentages to transparent, negotiable fees or even hourly rates. These changes aim to address the industry's incentives and behaviors, which critics argue can lead to suboptimal outcomes for consumers.
The dialogue delves into the real estate industry's competitive landscape and the perceived discrepancy between service quality and high commission rates, around 6%, which has remained unchanged despite rising home prices. Critics, including economists and industry observers, argue that these rates may not accurately reflect the value provided to consumers, and the competitive nature of the industry may not be as healthy as claimed, with potential anticompetitive practices among professionals. The National Association of Realtors (NAR) has faced significant antitrust litigation, including a $418 million settlement in Missouri, acknowledging issues with commission practices while denying any wrongdoing. The settlement mandated changes in commission communication and handling, suggesting tacit collusive activities within the industry. Economists and insiders propose reforms, advocating for lower, more negotiable commissions that better align with the value provided, possibly shifting from fixed percentages to transparent, negotiable fees or even hourly rates. These changes aim to address the industry's incentives and behaviors, which critics argue can lead to suboptimal outcomes for consumers.
00:00
00:00
The Hidden Economics of Real Estate: Competition or Collusion?
The episode discusses the real estate industry, perceived competition, and its impact on consumers. Despite claims of a competitive market benefiting consumers, economists view the industry differently, suggesting prices might be unnecessarily high. Highlighting the significant financial and emotional stakes in real estate, it explores a recent antitrust lawsuit against the National Association of Realtors requiring changes in how realtors charge clients. The dialogue features perspectives from the NAR's president and chief economist, alongside critical views from other economists who suspect collusion rather than competition.
02:05
02:05
Challenges Facing the National Association of Realtors and the Real Estate Market
The National Association of Realtors, the largest trade organization in America, faces scandals and a declining market. Despite having over 1.5 million members, the organization has experienced leadership issues and a decrease in home sales, with only 4 million existing homes sold in 2023, the lowest in 30 years. Factors contributing to the slump include post-Covid market adjustments, high mortgage rates, and political and economic uncertainty. Real estate agents play a crucial role in navigating the complex and intimidating process of buying or selling a home.
03:44
03:44
Economic Analysis Reveals Misaligned Incentives in Real Estate
A microeconomist specializing in industrial organization discusses a research paper co-authored with Levitt, revealing how real estate agents might not act fully in their clients' best interests due to the commission-based payment system. The study suggests that agents may encourage sellers to accept initial offers rather than wait for potentially higher bids, primarily because the standard commission split doesn't incentivize maximizing the seller's profit. Despite intentions to act ethically, the system's structure can lead to consumer exploitation. The dialogue also mentions receiving mild backlash, not due to disagreement with the findings but because of how the industry was portrayed, highlighting a distinction between systemic issues and individual ethics.
05:47
05:47
The Unique Dynamics of Residential Real Estate Agents
Residential real estate is characterized by its atypical agency setup, where both buyer and seller have their own agents. Unlike other agent-based industries like legal or financial services, this sector involves two agents representing each side, often from the same firm, fostering a collaborative environment. This dual representation and potential for repeated collaboration among agents differentiate residential real estate from other purchase industries.
07:28
07:28
The Complexities of Dual Agency in Real Estate Transactions
The dialogue explores the implications of dual agency in real estate, where an agent may represent both the buyer and seller. It highlights the potential benefits of having an agent who understands both sides of the market but also raises concerns about loyalty and the industry's standard practices. The speakers discuss the challenges of negotiating commissions directly with listing agents and the resistance encountered when deviating from conventional practices. The conversation reflects on the dynamics of agent-client relationships and the systemic aspects of real estate transactions that may discourage transparency and individual negotiation.
09:58
09:58
The Impact of Sales Commissions on Housing Prices
The dialogue explores how real estate sales commissions affect housing prices, noting that higher commission rates in the US compared to other countries suggest prices may be inflated. It discusses the historical context of fixed commission fees and the shift towards percentage-based commissions due to legal challenges, highlighting the steady increase in home prices and commissions over the years without a corresponding increase in selling costs. The comparison with stock brokerage fees illustrates how other industries have seen transaction costs decrease over time, contrary to the real estate sector. Despite commission inflation, it's noted that individual real estate agents do not necessarily become wealthier.
13:51
13:51
The Impact of Real Estate Agents in Housing Market Transactions
Research focuses on how real estate agents facilitate connections between buyers and sellers in the housing market, with a particular emphasis on the variability in agent effectiveness. It is noted that while it's possible to buy or sell a home without an agent, the majority of transactions involve them. The study aims to understand the dynamics of the remaining transactions and the significance of individual agents.
14:53
14:53
Study on Real Estate Agents' Quality and Market Competition
A recent study analyzed MLS data across 60 US markets to examine agent performance, revealing that experienced agents significantly outperform inexperienced ones in terms of sale probability, particularly in down markets. With around 3 million licensed real estate agents in the US and roughly 8 million transactions annually, the oversaturated market is driven by the high gross potential income and low entry costs, resulting in very small individual earnings.
17:20
17:20
Becoming a Real Estate Agent: A Pathway to Independence and Challenges
The process of becoming a real estate agent is relatively straightforward, requiring a short course and a state test, unlike professions demanding degrees or apprenticeships. Agents are hired as contractors, eliminating salary obligations for firms, which only share commission, allowing for easy market entry but also leading to market saturation with inexperienced agents.
18:16
18:16
The Impact of Fixed Commission Rates on Real Estate Industry Efficiency
The discussion highlights how fixed commission rates attract inexperienced agents due to the allure of high payouts, leading to a less efficient market. It suggests that more competitive commissions could increase the number of experienced agents and improve the selling of houses, emphasizing the need for addressing commission structures to enhance industry efficiency. Despite claims of negotiable fees, the National Association of Realtors' leverage maintains these rates, contributing to the industry's resistance to change. The dialogue questions why technological advancements and new entrants have not disrupted residential real estate as seen in other sectors.
19:29
19:29
Challenging Real Estate Industry Practices and Collusion
The real estate industry, unlike others, has seen less disruption from technological advances. The dialogue discusses how, despite potential for change, residential real estate has remained relatively stagnant due to the complex nature of transactions and a form of collusion among agents. Highlighted is a class-action lawsuit against the National Association of Realtors (NAR) in Missouri, alleging that the NAR and several brokerages engaged in monopolistic behaviors by imposing non-negotiable commission rates on home sellers. The lawsuit's evidence included training materials that suggested steering clients towards higher commission listings. The NAR settled for $418 million without admitting wrongdoing, but faces additional lawsuits in other states for similar charges, indicating ongoing scrutiny of the real estate sector's practices.
23:25
23:25
Economists Criticize National Association of Realtors, Realtor Responds
The episode featured economists criticizing the National Association of Realtors. Following this, a broker associate from Springfield, Massachusetts, provided a response.
23:56
23:56
2024 President of the National Association of Realtors Discusses Role and Priorities
The National Association of Realtors, led by its 2024 president, represents 1.5 million realtors nationwide. It acts as a trade association advocating for members and property owners' rights.
24:32
24:32
Significant Portion of Real Estate Agents Adhere to National Association of Realtors' Code of Ethics
Approximately half of the estimated 3 million real estate licensees in the country are members of the National Association of Realtors, committing to the organization's Code of Ethics established over 100 years ago.
24:53
24:53
Exploration of Trade Organizations' Assets and Real Estate Commissions
The discussion addresses a claim from the New York Times about a trade organization's substantial assets, explaining that such assets include properties, reserves from member dues, and investments in property technology. It further explores the significant amount Americans pay in real estate commissions annually, sparking a debate on commission rates. Kevin Sears argues that commissions are negotiable, contrary to perceptions of them being too high.
26:22
26:22
National Association of Realtors Addresses Antitrust Settlement and Changes
The National Association of Realtors discusses a $1.8 billion federal court verdict, later settling for $418 million, highlighting changes in multiple listing service practices and buyer representation agreements without admitting wrongdoing. The organization emphasizes its role in providing consumer choice and supporting private property rights.
29:34
29:34
The Complex State of the Housing Market and Challenges for Real Estate Professionals
The housing market has seen a significant increase in home prices, benefiting homeowners but presenting challenges for real estate professionals due to high mortgage rates, record home prices, and limited inventory. These factors have led to low home sales. A federal jury trial in Missouri and a class action suit brought by homeowners have further complicated the situation for the real estate industry, with the National Association of Realtors facing criticism. Despite these legal challenges, the real estate profession remains highly competitive, drawing both new entrepreneurs and those exiting the field annually, akin to the restaurant industry. The lawsuit and settlement appear to have been driven by a small number of dissatisfied homeowners, raising concerns about the impact of legal actions on the industry at large. Surveys indicate a majority of homebuyers and sellers are satisfied with their realtors.
32:17
32:17
Exploring Trust and Satisfaction in Realtor Services
The discussion focuses on a survey commissioned by NA, highlighting customer satisfaction with realtors primarily due to trust and efficient handling of paperwork. Concerns are raised about the survey's representativeness and potential bias towards positive outcomes, emphasizing the importance of trust in realtor-client relationships. Furthermore, the conversation touches on how recent NA settlements might influence the real estate industry, affecting organizations, brokerages, and agents.
33:27
33:27
Adapting to New Real Estate Rules: Challenges and Opportunities
Despite disagreements with new regulations, entrepreneurs in the real estate sector are finding ways to adapt, explaining new requirements to clients and adjusting to market dynamics influenced by economic factors. The future of real estate transactions is expected to evolve significantly as the industry navigates through initial challenges, witnessing new business models emerging in response to the changing regulatory environment.
34:33
34:33
The Impact of Real Estate Commission Rates on Market Competition and Minority Homebuyers
Concerns are raised about how the lack of data on real estate commission rates by a major real estate organization could lead to a lack of market competitiveness and potentially harm minority first-time homebuyers due to the financial burden. While economists have observed a slight decrease in the traditional 6% commission rate over decades, it remains relatively consistent across different markets, raising questions about fairness and effort. Despite the lack of official data, insights suggest that market complexities and consumer habits may influence these rates. The call for more competition and consumer awareness is viewed positively.
37:07
37:07
Navigating Changes in Real Estate Practices and Consumer Behavior
Following a lawsuit and settlement, adjustments in real estate practices are expected, particularly regarding transparency in agent compensation and written agreements for buyers. These changes aim to enhance conversations between agents and consumers, clarifying expectations and the value of a realtor's services. Despite these efforts, the impact on consumer behavior in terms of financial and behavioral incentives remains a subject of discussion, with some skepticism about how buyers and sellers will react to the nuances of real estate transactions under the new guidelines.
38:47
38:47
NAR's Settlement and Its Impact on Realtors and Housing Market
Following a class action lawsuit, the National Association of Realtors (NAR) agreed to pay over $400 million in damages and adjust policies, including changes to compensation agreements and listings that could affect housing prices. Despite not compiling data on realtor commissions, NAR reported an annual influx of 200,000 new realtors, suggesting high market churn and competitive challenges, particularly for beginners in acquiring listings. The median income for realtors is around $45,000, with significant variation; one-third earn less than $20,000, while 20% make six figures. This entrepreneurial field sees many aspiring professionals testing their skills, although success varies widely due to the competitive environment.
41:14
41:14
Demographics and Rewards of Real Estate Membership
The real estate membership comprises mostly women, with a median age of 55. Despite not being financially lucrative compared to other professions, members find joy in helping first-time buyers and become integrated into the community, valuing the intangible satisfactions of their work.
41:47
41:47
The Undervalued Contributions of Women in the Workforce and Home
The conversation among economists over the past decade highlights the unrecognized value of women's labor at home and in low-paying jobs like realtors. Despite the minimal financial rewards, many women continue in these roles, drawn by the possibility of substantial income or as a choice for supplementary household income. Interestingly, despite challenging economic times, the number of women pursuing these careers hasn't decreased significantly, suggesting an aspiration towards achieving the high-earning potential observed in some peers.
42:51
42:51
The Economic Structure of Real Estate Agent Compensation
A significant portion of real estate agents experience no compensation, leading to high industry churn. This model contrasts with other professions, resembling more the unpredictable success of artists or performers. With rising house prices, more agents enter the market, primarily benefiting top performers, brokerages, and the National Association of Realtors (NAR) through increased dues and fees, rather than improving the average agent's earnings.
44:51
44:51
Evolving Real Estate Commission Structures and Their Impact
The dialogue explores potential shifts in real estate sales incentives and their implications for buyers, sellers, and agents. It discusses how new regulations could allow for more flexibility in commission structures, prompting a reevaluation of the traditional 6% commission split. An hourly fee system for agents is proposed as a more transparent alternative, although concerns are raised about its effectiveness in addressing information gaps and potential inefficiencies. The conversation also touches on the possibility of a disintermediated market, akin to the travel industry, and the potential return to traditional agent-reliant practices due to the complexities of buying and selling homes. Lastly, personal insights are shared on the considerations involved in selling a home by owner versus hiring an agent, highlighting the value of agents in niche markets and hot real estate climates.
50:45
50:45
The AI Revolution and Its Impact on Society and Economy
The dialogue covers the significant advancements in artificial intelligence in 2024 and the mixed views surrounding its progress. It highlights the debate on valuing technology versus human value in the AI future. Additionally, it mentions a bonus episode featuring discussions with economists and the outgoing mayor of San Francisco, focusing on various economic and political topics.
发言人 100:04
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.
发言人 200:14
The free market is working, and I think the consumer is benefiting while still receiving professional representation.
发言人 100:22
But if you ask most economists, they have a different view of this industry.
发言人 300:28
It's just hard not to say, man, these prices seem way higher than they need to be.
发言人 100:33
This is an industry that most of us interact with rarely. But when you do, the stakes are high.
发言人 400:39
It's a really important decision financially, emotionally. You need a little bit more handholding.
发言人 100:45
but is your hand being held or is it being forced?
发言人 200:49
I take great offense at that characterization.
发言人 100:52
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 Free Economics Radio, we speak with the president of the Nr as well as its chief economist.
发言人 501:16
The real estate profession is one of the most competitive out there. It's almost like economic textbook definition of perfect competition.
发言人 101:24
And we hear from two other economists who don't see much competition, but instead what looks more like collusion.
发言人 301:32
Okay, we all know how this thing works, wink, wink, and if we just don't rock the boat too hard, we can keep it together.
发言人 101:42
Consider the boat rocked starting now.
发言人 101:57
This is Freakonomics Radio, the podcast that explores the hidden side of everything with your host, Stephen dubner.
发言人 102:15
The National Association of Realtors, which is headquartered in Chicago, is the largest trade organization in America with more than 1.5 million members. There are real estate agents who are not realtors with a capital R, but the NAR is where the action is. The organization has endured a variety of scandals, especially among their leadership, allegations of sexual misbehavior, financial misbehavior, monopolistic behavior. And there's quite a list. In the past few years, presidents of the organization have come and gone as quickly as the cookies at an open house.
发言人 102:51
Another big problem, there just isn't as much business as there used to be. In 2023, only 4 million existing homes were sold, the fewest in 30 years. There are a variety of reasons for a slump. The Covid pandemic had produced a spike in sales that has since receded. Mortgage rates are still relatively high, and there's been a lot of political and economic uncertainty. There's also the simple fact that buying or selling a home can be stressful, complicated, and confusing to the point of intimidation, but that's where the real estate agent comes in. Real estate agents are there to help you.
发言人 303:32
They do know the market better than most buyers or sellers. They deal with transactions all the time, that's exactly why you would hire them.
发言人 103:40
That is Chad Severson, he's an economist at the University of Chicago.
发言人 303:44
I'm mostly a microeconomist and within that my field is industrial organization, which is really just the economics of companies.
发言人 103:54
Severson started out as a mechanical engineer, so he understands how something like a house is built. And as an economist, his job is to understand how houses are bought and sold. And part of that is understanding the incentives of the players involved.
发言人 104:09
Some years back, Severson co-authored a research paper along with my Freakonomics friend and cosmotheoros Levitt, which found that real estate agents do not necessarily act in the best interests of their clients. They argue that when you are selling a home, an agent may push you to accept the first decent offer rather than hold out for a better price. Most agents work on commission, which means they are only paid when there is a sale. Historically, the commission has been roughly 6%, which is split between the seller's agent and the buyer's agent. And then each of those agents often kick back half of their fee to their brokerage, which means that the seller's agent earns roughly 1.5 percent of the sale. Not enough, Severson and Levitt argued to help the seller max out. I asked Severson if he got any hate mail when the original paper was published.
发言人 305:01
Yeah, including some of my relatives, but it wasn't true hate. In that case, I have a bone to pick with you as a quote.
发言人 105:09
What was the nature of these complaints and what did they say that you got wrong?
发言人 305:12
It was usually more diffuse than that, It was just like you're painting us in a bad light. I do care about my clients. I would never do something that's not in their best interest.
发言人 105:23
Well, both things can be true though, correct? Yes, I mean, you can have very good intentions, but if you're in a system that's exploitive of the consumer, then it's exploitive of the consumer, even if you are a good, hard-working honest .
发言人 305:37
person. I think that's totally right. And I am happy to think of this as a problem with the system rather than a problem with the people. In fact, I think that's the right way to think about it.
发言人 105:48
Would you just describe how the residential real estate sector is an unusual sector, maybe atypical?
发言人 305:55
What's unusual about residential real estate is both sides have an agent at the same time. That's not totally unique, but it's atypical for agency based purchase industries.
发言人 106:07
I mean, it happens with lawyers. For instance, if I need to hire a lawyer to work on something, then the party that I'm in a conflict with.
发言人 306:14
they've got a lawyer too. That's right, you've got two sides and each side has their own representative. It is different from other agent based middleman quote type purchases like buying insurance through an insurance agent or using a financial advisor to buy stocks or securities. There's only one party you're dealing with, whereas residential real estate, you've got your agent and the other side has their agent.
发言人 106:41
Let's say I'm buying and I've got an agent and there's a property I'm interested in. They've got their agent. It's quite possible that my agent and that agent know each other and have perhaps collaborated before, and indeed maybe even work for the same firm as that possible.
发言人 306:58
That's totally true, and in fact, quite likely in most markets, they might be familiar with each other and have worked together before and importantly, expect to work together again. Quite often, they actually work for the same company. They're actually sharing their compensation in the back office bits and their colleagues, which is not so typical in, say, law.
发言人 107:22
If I wanted to sue you, Chad, I probably wouldn't hire a lawyer who works at the same firm that your lawyer works at.
发言人 307:28
Yeah, in fact, I think there are rules against that for lawyers where it's just a matter of course in residential real estate. In fact, every once in a while you get two sides represented by the same agent. They're working both sides of the deal.
发言人 107:41
And what are the ramifications of the fact that a buy side agent in one moment may be a sell side agent the next moment? If I wanted to think about it positively, I could think, well, that makes sense, because if I'm buying, my agent has also sold a lot of properties and therefore knows what to look for. On the other hand, I could think, well, it feels like maybe they are part of a fraternity that I'm not a part of, And even though I feel like they're representing me and me alone, in fact, they work both sides of the aisle. Yeah.
发言人 308:15
I think you nailed it with that description. There could be good things in terms of understanding the market from both sides, but on the other hand, these frequent repeated interactions between agents can lead to this behavior of, hey, this is how it works in this industry. And if it works well, and if you want to do something different I'm not sure we can keep working together.
发言人 108:41
I've been in a case a few times as a buyer where I would say to the selling agent, I don't have a buyer's agent. I'm just going to operate on my own. So can we agree from the outset that we're going to subtract 3% off the price? And I get the meanest looks? And I'm told that that's not the way it works. I mean, is that not the way it works?
发言人 309:03
Well, there you go, you have the legal right to propose that they have the legal right to take you up on it, but they choose not to. Now, why do they choose not to, Because they know if they start deviating from how things work and everyone starts doing that, then the system might fall apart. The Na will tell you, oh, of course, you always have the right to negotiate over commissions, but your experience and the experience that I know other folks have had is when you try, you're often met with what you describe, which is I'm sorry, that's just not how I do business.
发言人 109:39
I was also told that my client would never accept that, and I'm like, why the heck would your client not accept that? Because the money is going to get deducted from the sale price that they get .
发言人 309:51
was their client in the room with you? And that was said .
发言人 109:54
the client was not in the room.
发言人 309:56
Yeah, interesting.
发言人 109:58
So how do sales commissions affect housing prices? Can you quantify that?
发言人 310:03
That's the $64 billion question, there's some estimates out there I'm not sure if anyone's agreed on how big it actually is, I can say that there are a lot of countries who have agent mediated real estate transactions that that end up with much lower effective transaction prices than the us. So the us historically has been up in this five and half to 6% commission rate and there other places down in the one, the one and half percent effective rate if you look at those other countries and say are there reasons why selling houses should be fundamentally cheaper in those places? You would say no, and certainly not by a multiple factor that we've seen. So it's just hard not to say that, man, these prices seem way higher than they need to be to get the job done.
发言人 110:59
You may be wondering, why do real estate agents get paid on a percentage basis in the first place? Why not an hourly rate like lawyers and accountants and electricians and consultants? And, well, like a lot of people, To answer that question, we have to go back to 19 oh 8 and the founding of the National Association of Real Estate Boards. Back then, local boards in places like Chicago, Omaha Los Angeles had set fixed commission fees. And this eventually became the standard. In 1950, the Supreme Court declared that this amounted to price fixing in violation of the Sherman Act. The workaround was the suggestions, which some observers thought looked an awful lot like the fixed schedules they supposedly replaced.
发言人 111:48
In 1972, the National Association of Real Estate Boards became the National Association of Realtors. It didn't take long for the federal government to once again declare their practice anti competitive. This government scrutiny and the legal back and forthing has continued ever since, and yet commissions have remained relatively steady at 5 to 6%. Home prices, meanwhile, have continued to rise. The current median price in the US is around $400000, double what it was 20 years ago. The same percent commission on a higher price means a higher commission.
发言人 312:29
There's nothing really you can look at in the cost of selling a house that would scale up one for one with the price of the house, It shouldn't be twice as expensive to sell a house that cost twice as much.
发言人 112:42
Imagine that instead of buying a house 20 years ago, you were buying 1000 shares of stock in Apple Inc, the share price back then, adjusting for splits was around 1 dollar, so the stock would cost through $1000, and if you went through a brokerage, might pay a $20 fee, which works out to a 2% commission. Now imagine you buy 1000 shares of Apple stock today, the share price is well above $200 now, so it would cost you over $200000, would you still expect to pay a 2% brokerage fee a $4000 commission. No, you would not. In fact, you would probably pay close to 0.
发言人 113:27
In most industries, transaction prices fall over time thanks to technology, economies of scale, and competition. But again, residential real estate is not like most industries. So does this commission inflation mean that every real estate agent is getting filthy rich? It very much does not. Let's bring in another economist to help explain.
发言人 413:52
I'm Sonia Gilbert, and I'm an assistant professor at Baruch College. Most of my research is about the housing market and how buyers and sellers find each other and how real estate agents help them in that process.
发言人 114:05
And are you putting help them in quotes?
发言人 414:09
I mean, they're supposed to help, and because in the us, most of the transactions go through a real estate agent. I'm putting help in a way that there's no alternative for the consumers.
发言人 114:24
To be fair, there are alternatives. It is legal in every state to buy or sell a home without representation, but it is rare. Only around 7% of sellers go the route known as fizbo or for sale by owner. What Gilbert wanted to understand was what happens in the other 93%, and she was particularly interested in how much the individual real estate agent matters.
发言人 414:50
The main takeaway is that not all agents are the same.
发言人 114:53
Gilbert recently published a study along with her husband and fellow economist Paul Goldsmith Pinkham, that looked at data from the Mlss or multiple listing services in 60 markets across the us. Around 95% of Mlss are owned by the National Association of Realtors. An MLS is database where agents post their sales listings and communicate with one another about prices and commissions, including how much a buyer's agent should expect to receive. This is called a cooperating compensation agreement, and it is at the root of the alleged fixing of rates. Gilbert and Goldsmith Pinkham used this MLS data to analyze the comings and goings of individual agents as well as their performance. What they find .
发言人 415:43
There's some really experienced agents that offer different quality service from really new agents. There's a lot of inexperienced agents out there, and they provide a much lower quality service in terms of probability of sale, which is especially important in a down market.
发言人 115:59
This may not surprise you that experienced agents tend to be better, but when you consider how many agents are out there, you may be concerned with your odds of getting a good one. Roughly 3 million people in the us currently hold a real estate license. Remember what I said earlier about the total number of home sales in a year? 4 million, Even if there are two agents per sale, 1 on the buy side and one on the sell side, that gets us to 8 million transactions. Do we really need three agents for every 8 transactions? So why does the market attract this many agents? Here's Chad Severson again.
发言人 316:38
One way to think about it is just the gross pot of money involved is enormous total number of houses sold per year times average price times 5.5 or 6%. That is billions and billions of dollars if that's the Pi. And it is extremely low cost to get in and try to start slicing off a piece of that pie, you're going to have a lot of baker trying to cut the pie. Now it ends up there's so many, the slice that any average person gets really tiny. But I think that's one way to think about is just a ton of money, super easy to get into.
发言人 117:21
How easy is it? Here's Sonia Guild book.
发言人 417:24
It depends on the state, but in most states you have to take a course, which could be a 50 hour course. You put your foot down and you can be done with it in a week. And then you take a state test and you pay a license fee. It's just so different from any other profession where you have to get a degree, where you have to get an apprenticeship before you can actually practice. And it's really easy to get a job because the agents essentially work for themselves. When an office hires an agent, they hire them as a contractor. So they're not on the hook for any salary at all. They're just getting part of their commission so they don't lose anything by hiring as many people as they want.
发言人 118:07
As Gilbert said earlier, experienced agents perform better than newbies, but newbies continue to flood the market. Why?
发言人 418:16
We find that the reason why there's so many inexperienced people is because of the quote unquote, fixed commission rates.
发言人 118:26
In other words, that five or 6% commission is so attractive, almost like a lottery payout, that it draws many new players even though they have a slim chance of getting that payout. So what would happen if commissions were smaller?
发言人 418:41
We find that if the commissions were more competitive, there would be many fewer agents, there would be a lot more experienced, and more houses would be able to sell. Essentially, addressing the commissions is one of the most important ways that we can make this industry more efficient.
发言人 119:02
The National Association of Realtors insists that commissions are not fixed, that fees are negotiable. That may be true in theory, but in practice the NAR has maintained its leverage. How do they do that? We live in an economy where new technologies and new entrants are constantly pushing aside the old guard. Why hasn't that happened in residential real estate? Here's Chad Severson again.
发言人 319:29
Additional information has radically changed a lot of industries going back a few decades, Travel agency lost 60% of its revenue when people figured out they could buy airline tickets themselves online. And airlines figured out flyers were happy to do that. Basically, one of two things happen. Either the industry does totally restructure itself. That's kind of what happened with Travel Agency, or it's a little bit of a squeezing the balloon thing like car sales where they've moved some of the obfuscation, for lack of a better word, to other parts of the transaction, or they just try to make profit on other dimensions now through repair deals or whatever. So that tends to be how a lot of industries have responded. Residential real estate has changed less.
发言人 320:22
And I think it's because you have the two sided news of the deal, So it's not just one agent decides to do things differently and things start falling apart. If one starts doing things differently, the other one can say, oh, no, you don't. And here's what's going to happen if you do .
发言人 120:40
what you're describing sounds like a word that we don't like to throw around casually, but it's a word that you certainly use to describe this ecosystem, which is collusion. In what ways does collusion exist in this system?
发言人 320:54
There's explicit collusion, the smoke andfind the room where parties in an industry get together and say, hey, let's make a plan so we can monopolize this thing and make more money. I don't think there's ever been evidence of this happening widespread in real estate the kind of collusion that Steve and I talked about in the paper is what an economist might call tacit collusion, which is there's never an explicit agreement and no one's, you know, signed contracts of this form, which would be completely illegal. But there is a sense of, okay, we kind of all know how this thing works, wink, wink, and this thing works well for us. And if we just don't rock the boat too hard, we can keep it together.
发言人 121:47
But in 2023, the Na was the main defendant in a class action lawsuit in Missouri. The lead plaintiff, Rhonda Burnett, argued that in 2016, she and her husband wanted to sell a home, and her real estate agent gave her a form with four commission rate boxes to choose from, 6%, 7%, 8% or 9%. When Burnett asked if the commission was negotiable, which the NAR says it always is, she was told that a lower commission might diminish the likelihood of her home being shown. The brunettes and other plaintiffs argued that the Na and several brokerages conspired to impose a quote blanket unilateral and effectively non negotiable offer of buyer broker compensation. The trial evidence included a training script from one of the brokerages. It instructed agents to say if an agent has 10 different houses, 9 of which comes with a 3% commission, one of which comes with a 2.5% commission, which houses, do you think they're going to show it took a jury barely two hours to rule against the Na. The court awarded damages of $1.8 billion, which in a settlement, the Na negotiated down to $418 million.
发言人 123:04
But the trouble is not over. The NAR is facing lawsuits in several other states charging monopolistic behavior coming up after the break. What does the Na have to say for itself?
发言人 223:17
The settlement was part of our agreement where we didn't admit to any wrongdoing.
发言人 123:22
I'm Stephen dubner, this is Freakonomics Radio, we'll be right back.
发言人 123:40
Okay, in the first chunk of this episode, we heard from economists who were beating up on the National Association of Realtors. Let's hear now from the Na.
发言人 223:50
My name is Kevin Sears. I am a broker associate with La Macchia Realty in Springfield, Massachusetts, Kate .
发言人 123:56
also.
发言人 223:58
and I'm the 2024 president of the National Association of Realtors.
发言人 124:02
Yeah, you almost left that one out. That's a big deal, no?
发言人 224:06
Yeah, you know, typically when I do the interviews I'm used to just talking with local media and they want to know the brokerage I'm with.
发言人 124:13
I understand give me a little bit on the N, what is the N exactly?
发言人 224:17
The National Association of Realtors is a trade organization that has about 1.5 million realtor members across the country. We are a trade association that advocates for our members and for property owners rights across the country.
发言人 124:32
What share of all real estate agents belong to the National Association of Realtors?
发言人 224:36
I think that there's probably close to about 3 million licensees across the country, and so we've got about half of them that are members of the National Association of Realtors, which, you know, part of the requirement to be a member is you have to subscribe to the Code of Ethics, which is very important for us. And it's been around for over 100 years.
发言人 124:53
I've read that the organization holds more than a billion dollars in assets. Why would a trade organization have that many assets?
发言人 225:00
Yeah I'm not sure where you read that.
发言人 125:02
That was the New York Times.
发言人 225:04
Yeah, the New York Times has been known to get some things wrong. What I'll tell you is that the National Association of Realtors, we absolutely do have some assets and part of the assets that we have are properties that we own, that we use. We also have reserves built up from dues from our members. We also have different wholly owned subsidiaries that invest in property technology and that sort of thing.
发言人 125:33
The Na charges annual dues of $156 and with 1.5 million members, well, it pays to be the country's biggest trade association. But when you're thinking about real estate agents, the important number to keep in mind, the top line number is the total amount that Americans pay them every year, around $85 billion. That is not the value of the real estate they sell. That is $85 billion in sales commissions. You might take this to mean that those five and 6% commissions, whether set by tacit collusion or otherwise, are simply too high. Here's what Kevin Sears says.
发言人 226:16
commissions are entirely negotiable and they have been for the entirety of the 30 years that I've been a real estate licensing and realtor .
发言人 126:23
economists that I know, when they look at the Na National Association Realtors, they describe it as somewhere between a monopoly and a mafia, that it's got all the power on the selling and buying side of the housing market in the us. I assume you disagree with that characterization. Tell me why they're wrong.
发言人 226:40
Yeah, I take great offense at that characterization. There's over 3 million across the country, and we have only half of those licensees as members. Consumers have tremendous choice right now, they can choose who to hire, what to pay or to go it on their own. The fact that we are the only national organization that has reached to all 50 states and we have the ability to lobby in our nation's capital, that's a good thing, not only for our members, but for our industry and for the American consumers who rely on us to promote private property rights and the protections thereof.
发言人 127:21
Let's talk about the recent settlement. Tell me what it means for your organization and what kind of changes you're making because of that.
发言人 227:28
Unfortunately, a jury of eight in Missouri found us liable in federal court. And as a result, there was a jury verdict of $1.8 billion. Since it was an antitrust case that meant to was tripled up just shy of $5.4 billion. We did not have the resources when it came to being able to satisfy the jury verdict. And so we negotiated with the plaintiffs on a settlement. The settlement does have a financial component. Over the next three years, the National Association of Realtors will pay $418 million as part of the settlement.
发言人 228:05
There are a couple of other things that come along with that. The first is that the settlement was part of our agreement where we didn't admit to any wrongdoing. We do believe that the practices were legal, meaning that they were allowed by the law. But with that said, we did agree to make some practice changes. And there's two major components to the practice changes. The first has to do with the multiple listing service, there will no longer be allowed an offer of cooperating compensation displayed on the multiple listing service. With that said, offers of compensation can still be made off the MLS.
发言人 228:41
The second big change has to do with buyers. If buyers want to tour a home, they can expect to have a written agreement presented to them where it will spell out the services that will be provided by the realtor and the fee that that realtor will be looking to get paid. The seller may still offer compensation to their agent, but what the buyer will need to understand is that if the seller does not offer compensation, doesn't offer the amount that is in their agreement, the buyer will have to come to the closing table with extra money to pay for their representative.
发言人 129:20
So that is the take on the Na settlement from the president of the Na. We spoke with another high level executive there.
发言人 529:28
Lawrence Yun, chief economist for the National Association of Realtors.
发言人 129:34
And how would you describe the state of the housing market at the moment?
发言人 529:39
Well, for homeowners, it is great news. I mean, people have seen the home price rise roughly 50% from pre Covid days. But for the real estate professionals, the past two years has been quite difficult. High mortgage rate along with record high home prices and limited inventory has restricted business opportunity. Home sales essentially trending at 30 year low levels even though their past clients are all happy, super excited about having been a homeowner.
发言人 130:11
So your organization, the NAR, recently got a pretty big spanking from a federal jui trial in Missouri and class action suit brought by homeowners. What's your response to that verdict? And then the settlement that the Na entered into the .
发言人 530:23
real estate profession is one of the most competitive out there. It's almost like economic textbook definition of perfect competition. You have so many new entrant every year, roughly 200000 new people, entrepreneurs trying to test out their skill set. And then you have roughly 200000 realtors who gave their best, but they said, no, it's not for me. And then, of course, you have all different business models, full service, limited service, discount brokerages. And great thing about America is that Americans can do it by themselves if they want to. So I thought the market was competitive, but I guess the lawyers can always convince few people to get the verdict they want.
发言人 131:04
Here's something you said about the lawsuit in the settlement. You said a couple of lawyers were able to find 2, 3 unhappy owners and make a lawsuit and you have 9, 11 jury members. So you can count the number of people involved in the lawsuit. Now, to me, Lawrence, it sounds like you're saying the Na was screwed over by the legal and jury system. Is that a fair assessment?
发言人 531:26
Again, as an economist, I look at the competitive nature, the free entry and exit of the people in the profession. The only other industry that is more competitive, more dynamic than the real estate brokerage industry is in the restaurant, constantly coming in, constantly going out. So let's say there was a couple of unhappy consumers of a restaurant. They may bring a lawyer to sue the restaurant to say, you look what they promise did not match the expectation of it, but to make it into a class action lawsuit to have all the restaurant across the country be impacted instead of fair judgment. When we take survey of consumers, recent homebuyers, recent home sellers every year, we have been doing it for 40 years. The numbers barely budge. Essentially, 70% say daily really enjoy working with a realtor .
发言人 132:17
who conducted the survey that you're citing about the customer satisfaction with realtors.
发言人 532:22
The survey was commissioned by Na. So when the consumers essentially say that they are happy, what was the key reason? And they say the trust factor, I don't have to get down to all this paperwork I trust, is what my realtor is relaying that information.
发言人 132:37
I can imagine that if an industry or a trade association like yours is commissioning a survey to understand how happy people are with their services, it might be tempting to find within that large data set of all people who have completed transactions, the home buyers or sellers who you know were particularly satisfied with their transaction. Persuade me that the data here are more representative than that and not cherry picked like that.
发言人 533:04
You know, one can talk to any homeowners, just knock on the door. So did you buy a home with a realtor? Who was the name of the realtor where you satisfied with the service? I'm pretty confident the result will be very, very similar.
发言人 133:16
How is the recent Na settlement changing things for not only the organization but the brokerages down the line and then the real estate agents down the line?
发言人 533:27
The rotors are quite optimistic about the new rules. They don't agree with the verdict, but given that the vert is in place, sometimes life is never fair on every angle. But entrepreneurs always adapt to new rules they're explaining to their clients, buyers are understanding they have to sign the form, and for the home sellers, it is irrational to ignore offers that say you have to pay by your agent because the offer may be high price or all cash that doesn't involve some complication later. So the process moves on, but at the moment, the market is primarily determined by economic factors, inventory availability, mortgage rate, job market situation.
发言人 134:13
How do you see real estate transactions being conducted differently in five or 10 years based on the new rules put in place by the settlement?
发言人 534:23
We are in the very first innings. There will be a lot of trial and errors, and there will be a lot of new companies trying to see what type of new model will best fit under the new rules.
发言人 534:34
We don't know what the numbers are and never collects data on the commission rate. And the reasoning for that is that we don't want to set a focus point. So somehow Nars that this is the average rate and everybody focused on that figure and leads to some tacit collusion. We don't want that, we want the market to be competitive, we don't study the commission, but anecdotally, some people are saying, well, now they are able to submit an offer with a little higher commission than what they had done before. Others are saying a little lower. Only concerning factor that I have is the first time buyers, especially minority, first time home buyers, because we look at the wealth distribution in America, we understand the American history about generational wealth transfer and it somehow it becomes the norm that the buyer have to pay out of their pocket to their agent. Essentially, you are denying the people in more moderate wealth circumstances, which in the us is essentially minority homebuyers.
发言人 135:33
So you've said, Lawrence, that the NAR does not gather data on commissions because you don't want it to seem like there is a collusive element there. But people do gather those data. Economists do that. We talk to Chad Severson. He and others have pretty decent data shows that the traditional rate of 6% is maybe slipped a little bit over the past couple decades, gets into the five something range, but that it's pretty consistent across the country, and in fact, it's pretty consistent even in high value markets like New York City versus lower priced markets, which to me seems strange because 6% of a $5 million apartment is an awful lot bigger commission for not necessarily five times the work of a million dollar house somewhere or 10 times the work of a $500000 house somewhere. So why do you think that commissions are so routinely in that range in so many different markets?
发言人 536:26
I am aware of what outsiders are studying. And again, as long as you have competition, let the market settle. What it would be. I don't know the particular subsellium, a home in New York City, maybe doing a coupe sell. It gets a little more extra complication compared to home selling out in, say, middle America in Kansas and maybe part of the settlement. Maybe there's broader knowledge that people can negotiate. As we know, there are many consumer habit. It is based out of inertia, but with more publicity, they maybe people will ask more questions and those are all good, more competition, more consumer awareness, all positive.
发言人 137:15
So that's how Lawrence Yoon, the chief economist of the NAR, sees the after effects of the lawsuit and settlement. And how about a president, Kevin Sears?
发言人 237:26
I do think there may be a little time of a learning curve for agents that are not used to having to present a written agreement to a buyer. What I can tell you is that on the sell side, the seller is going to have a professional representative and the conversation is going to be very, very similar to how it's always been. They're just going to make sure that they clearly explain about the compensation for the buyer's agent and the fact that commissions are negotiable. This is just giving our members a great opportunity to have those extra conversations with the consumer upfront about what they can expect in the buying process, what services and expertise and value the realtor will bring to the transaction, and how much they are looking to get paid and how they will get paid.
发言人 138:17
Do these explanations leave you a bit confused? Yeah, me too. Coming up after the break, the financial incentives may change in home buying, but how about the behavioral incentives?
发言人 338:31
If I go out to dinner and the restaurant accidentally puts an extra thousand dollars on my bill? I'm incensed, but when it comes to selling a million dollars, 1000 here, 1000, I just want to finish this, what does it matter?
发言人 138:44
I'm Stephen dubner, this is Freakonomics Radio, we'll be right back.
发言人 139:01
Okay, I feel we need a quick recap. The Na, or National Association of Realtors recently agreed to pay damages of more than $400 million and changed some policies after they were beaten in a class action lawsuit in Missouri. One change is that home buyers will need to sign a compensation agreement with their agents upfront, and realtors can no longer post what are called cooperative compensation offers on multiple listing services. Theoretically, this might lead to lower commissions for home buyers and sellers, and economists who analyze this market think this might lead to lower housing prices. I was surprised to hear Lawrence Yoon, the Nar's chief economist, say earlier that they don't compile data on realtor commissions.
发言人 539:51
The reasoning for that is that we don't want to set a focus point.
发言人 139:55
I did ask him for some other Na numbers. You talk about the new entrance into the NAR, every year is about 200000 new entrepreneurs, so that sounds to me like a very high rate of churn, especially if that many people are leaving each time, which suggests, but the median realtor is making very, very, very little money because it's really hard to get listings, especially when you're starting out. What can you tell us about the annual earnings of a median realtor?
发言人 540:24
When people look at the realtor professional, sometimes people think, well, maybe it's like teachers, you know, all the realtors get similar pay, but it's not, It's an entrepreneurial business. It's like a restaurant business. Some restaurants are driving year after year, some realtors are driving year after year, and then other restaurants are fairly new. Maybe they will eventually drive or maybe they will struggle. The median income is around $45000, but there's a huge distribution, about one third, make less than 20000, and then you have about 20% make six figures. The entrepreneurs who are coming into the industry say, well, I believe that I have this entrepreneurial skill set and they give it a try. I mean, one has to admire that, of course, not everyone will succeed because of the competitive nature of the marketplace.
发言人 141:14
Tell me a bit about the demographic makeup of your membership.
发言人 541:18
About two thirds woman, one third man, and the median age is around 55. Their income level is not comparable to what other profession would possibly offer. And stability. Yeah, I think the joy of seeing that first time buyer get that home, and then for most homeowners, they become friends. Being part of the community, I think there's some certain intangible satisfaction that comes from working in real estate.
发言人 141:47
One of the interesting conversations among economists and others over the past 10 years has been how much free labor was provided by women in the home that was never valued, never counted, no price put on it. And people are now trying to factor that into the economy with so many women as realtors, with so many of them earning not very much money, it strikes me that this is yet another area in which a lot of women are doing a lot of work and getting paid very little. Is that uncharitable or do you think that's accurate?
发言人 542:16
This is a voluntary choice that people are trying it out. Sometimes it could be for supplemental income for the household. We don't know. One interesting part is that we have seen two years of very difficult business opportunity, yet the membership number has barely budged, which is implying that even with the income level being what it is, some people maybe saying, look, I saw another realtor get that six figure income, maybe I can be that.
发言人 142:46
And here's something the economist Sonia Gilbert told us that she had come across in her research.
发言人 442:51
In our data set, we find that if you take a random agent, so someone who has some history, there's a 30% chance that they have never had a transaction before.
发言人 143:04
It's hard to think of another profession where 30% of the workers are unpaid. If you don't sell a listing that you control or if you don't connect with a buyer who finds a home and actually buys it, there is 0 compensation, actually less than 0. You may pay fees to the Na, and then there are all the costs associated with trying to get a sales commission. So you can see why there is so much churn at the bottom of the pyramid. At the top of the pyramid, meanwhile, there is a relatively small fraction of agents who earn a good living since they are routinely tapping into that five or 6% commission pool. This is what economists call a tournament model. A lot of players are hoping to climb that pyramid, competing against the field, while knowing that success is unlikely in this regard, selling real estate is less like A and more like the path followed by artists and performers. And I went back to Chad Severson, the University of Chicago economist, to ask why this is the case.
发言人 344:12
It's just the nature of the industry. All that happens when house prices go up is you get more agents. The structure now doesn't help the average agent. Maybe it helps the ones who do super duper well. It helps the brokerages because the more volume they get under their umbrella, the better they are. It helps the NAR because the more agents there are, the more dues and fees they collect, but at the individual agent level, this structure isn't what's making what they think would be nice about the industry nice. You know, the flexibility, I could do this part time, etc. You could do that in a world where you get paid by the hour too, right?
发言人 144:51
Knowing what you know about real estate sales and knowing what you know about incentives generally as an economist, how do you think this change in incentives is going to change behavior, whether among buyers, sellers, or agents on the buy side or on the sell side?
发言人 345:07
One possibility is nothing changes. The current structure is completely allowable under the new settlement. It's just the way that that structure is agreed to, has to be a little more explicit, and there are more rules about how the communication of the commission rates are done. But if you follow those rules, you can still have, say, a 6% total commission split evenly between the buyer's agent and the seller's agent. What might happen is the new rules give more leeway to agents who want to do things differently.
发言人 145:43
So let's say that, I mean, this is a very unlikely scenario, but let's say the NAR looks at what's coming and says, oh, we're losing our grip here. Our lovely model from the old days that made a lot of money for a hand full of agents is going away. And they come to you and say Professor Severson, I know you've been a critic of this industry to some degree, but you also appreciate the value that some real estate agents can bring. We want to design a new system from scratch for home sales. What would that look like in your mind?
发言人 346:19
I think it makes a lot of sense just to start with an hourly fee. You know, we hire a lot of professional services at an hourly rate and the hourly rate are settable agent by agent. You want competition in this market to certainly you don't want any coordinated hourly rate. It doesn't solve all the problems. You're still going to have information gaps and it'll create its own. When you pay someone by the hour, you get a lot of hours that maybe don't really need, so it's not a panacea.
发言人 146:53
Let's assume that the NAR settlement really does change how the commission structure works. And let's pretend that five or 10 years from now, it is a very disintermediated market. The way that travel agents were disintermediated, which means a lot of people are booking travel on their own. I don't know really how large this movement is, but I have read about a return to travel agents. Consumers want them because even though, yeah, I can book the flight and the hotel and rental car and other things I want to do all by myself online, it's a lot of work and it's a hassle and it can be confusing and so on. Could you see a future in which a similar thing happens with real estate sales that agents really do get disintermediated and that buyers and sellers end up doing lot on their own and they don't like it, and they want to return to the current ecosystem? As inefficient as it may be for buyers and sellers.
发言人 347:48
I can see people trying it out on their own and not liking it. Certainly, there's probably going to be a set of really sophisticated sellers and buyers who will just keep doing it by themselves. But I think what you describe could have, which is the typical how sellers like, geez, I might have the mechanism to do it, but I really don't know what I'm doing enough. I have the time, etc, etc. And so they want to hire an agent. Again, there are reasons why agents are valuable, but if the structure compensation falls apart and people do want to run back to agents, I understand why that would happen. I would hope the compensation structure doesn't reverse itself back to what we've got now.
发言人 148:31
So, Chad, I know you've got four kids. I believe half of them have gone off to college, is that right? Yep, okay, let's say the other half go off to college and you and your wife say, hey, time for a life change. We're gon na upsize, downsize, move somewhere warm, whatever. How do you think about selling the place you're in now and buying the place you end up wanting to buy?
发言人 348:53
I would consider doing a for sale by owner. If I did, I would quote cooperate with buyer's agents. In other words, if the buyer's agent was expecting to be compensated through a split with the sell side agent I'm not pay money because I would know that if they weren't being compensated by their own client, they've got no incentive to bring their client to my house. There are reasons to have a cell site agent that are valuable, particularly in the neighborhood I live in. It's sort of a small niche market and it's good to have that pre advertising component that having a sell side agent can give you because they talk to other people in the market.
发言人 149:39
What about the buying side? Let's say you spend a couple hours looking at things online and you say, oh, these look like 3 properties I'd really like to go check out. Would you want to hire a buy side agent to do that? Or would you want to do it on your own?
发言人 349:51
I think I could really handle the buy side myself. The exception is if I thought the market were tight enough that having knowledge of sales to come was important, just tootling around on the internet myself. I'm not going to know houses for sale until it's for sale, and in a hot market it might be essentially gone by that point. So in that world I might consider a buyer's agent, but in a slower market I think the agency component I would do myself.
发言人 150:23
That, again, was Chad Sever from the University of Chicago, thanks to him, and to Sonia Gilbert from Baruch College, as well as to Lawrence Yoon and Kevin Sears from the National Association of Realtors. I'd love to know what you think about this topic and about this episode. Our email is radio at freakonomics dot com dot.
发言人 150:45
Coming up next time on the show. A lot of big things happened in 2024. One of the biggest was a great leap forward in artificial intelligence. Or was it such a great leap? There is an exceptional level of hype that bubble is in many ways in the middle bursting right now, but just in case the bubble is not bursting, what's the best way to think about the AI future really is about how you see the value of technology versus the value of people.
发言人 151:19
That's next week in a regular time slot, which is now Friday morning Tos Eastern time, but before then, you will get a bonus episode. You remember me telling you we were going to San Francisco for a live show? Well, we did that. We spoke with a couple economists and the outgoing mayor. Pull out those phones because you guys are going to see a different mayor breed. That's next time. Until then, take care of yourself and if you can, someone else too, freakons the radio is produced by Stitcher and renbutsu this episode was produced by Augusta Chapman, The freak onic in radio network staff also includes Elena Coleman, Davin abalabi, Eleanor Osborne, Ellen frankman Elsa Hernandez, Gabriel Roth, Greg Ripon, jasmine Klinger, Jason gambriel, Jeremy Johnston, John Snarer Lyric Bow, Morgan Levy, Neal Carruth, Sarah Lilly Teo Jacobs and Zack lepinski Our theme song is Mr Fortune by the Hitchhikers and our composer is Luis gura as always, thank you for listening.
发言人 552:26
It's very welcoming that many other countries, especially developing countries that come to Na to say, how do you work? We want to have more orderly system. We don't want the total chaos in the marketplace, people getting ripped off. How does the multiple listing service work? What is your ethics rules? So we are happy to share all this with other countries. Who wants to know how the United States system works?
发言人 152:55
The Freakonomics radio network, the hidden side of everything. Stitcher.
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 Angele