Real Estate Practices Hit In FTC Study
, As-''if inflated housing prices arid PikeÛªs Peak interest rates werenÛªt discouraging enough, American -home buyers may also be getting ripped off by their real estate agents. This is the conclusion of a secret Ûª stqcly that the Federal Trade Commission has carefully suppressed.</br></br>Ûª The 475-page report examines ÐÊ real estate practices, and it laysÛª-things right on the line. There are two basic troubles with the industry, according to the study: lack of competition in brokersÛª commissions and ÛÏbarriers to the free flow of information to consumers,Û</br></br>The FTC found ÛÏsubstantial evidence Y . that [commission rates] are maintained at artificially high levels in the brokerage industry.Û It added: ÛÏAverage commissions increased at least 615 percent between 1950 and 1979ÛÓnearly twice the increase in wages for comparable white-collar jobs and nearly three times the increase in consumer prices during the same period.Û</br></br>IV|ost home buyers donÛªt realize that, the standard 6 or 7 percent brokerage commission is not set by law, but by agreement among brokers.</br></br>study, ÛÏare the result of industry-imposed restnctioris^arid structures that discourage ^price competition.Û Estimates- the^document: ÛÏA reduction of brid point in the prevailing cpminission rate nationwide would yields a. saving to consumers of $1.3 billion, rising 1978 figures.Û ÛªÐÊ in' transient metropolitan areas where most of the real estate action is, a house ;that changes hands every few yearsf'keeps accumulating large brokerage fees. The constant tacking on of å¤ or 7 .percent at each transaction Artificially inflates the market value" of the property, as well as the paper value of nearby homes that may not have been on the market for 20 years.