Historically, one of Arizona’s most attractive characteristics was the low cost of living, which included plenty of affordable housing. However, in recent years, things have changed.
Today, the Valley’s median home price is $415,000, according to the Arizona Regional Multiple Listing Service.
If house prices continue to stay high and the number of affordable houses stay low, what is the average Arizonan to do if they want to own a home?
Arizonans need to push real estate professionals and policymakers to change the system.
Often buyers don’t realize the “hidden” costs and fees that come with buying a house. Transparency within the real estate industry is needed to help buyers and sellers save money. Agents have been trained to tell the public it is “free” to hire a buyer’s agent.
This inaccuracy, and the current system, have propped up commission rates at twice the rate of other countries. In fact, Americans paid over $85 billion in real estate commissions last year.
According to a recent Harris poll, two out of every three Americans that bought or sold a home in the last five years said the system is unfair. Sixty-five percent say traditional agent commissions are undeserved given technology advances and 60% said they’re missing out on massive equity appreciation because of commissions, according to an online survey within the United States by The Harris Poll on behalf of Homie from March 5-8, 2021.
The public wants and needs change, which is hopefully why the Department of Justice brought an antitrust lawsuit against the National Association of Realtors — to investigate its competitive practices and commissions.
The DOJ made their position clear and took a hard line when they stated, “Real estate is central to the American economy and consumers pay billions of dollars in real estate commissions every year. We cannot be bound by a settlement that prevents our ability to protect competition in a market that profoundly affects Americans’ financial well-being.”
We support the DOJ’s investigation and believe that more transparency, affordability and an easier and more democratic process is needed.
We suggest that other brokers and agents listen to what the public is asking for by offering radical transparency about commissions; create more value for consumers for the fees they pay by providing buyer education, new homebuyer grants, technology and other services.
And uncouple the buyer and seller commissions.
Require both buyers and sellers to hire and pay their own agents directly.
This would bring real estate to parity with other industries. And lower commissions would impact the number of new agents flooding the market, leaving the most experienced, productive and trusted agents in a better position.
Doing right by Arizonans in need of affordable housing and fair real estate practices can also be doing right by the industry.
It’s time for real estate leaders to make history before they become history. It’s our choice.
Editor's note: Johnny Hanna is CEO and co-founder of Homie.
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