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Realtor Cartel Update: Massachusetts April 25, 2012

Posted by federalist in Real Estate.

One way that people have gotten around the Realtor Cartel is by nominally joining it. Indeed, when the barriers to entry are only a few thousand dollars of test and licensing fees it can make sense to join the cartel (i.e., become a “Realtor”) just to save on the costs of a single property sale.

The Massachusetts cartel moved in 1999 to raise its barriers with a “continuing education” requirement. This had the intended effect: The number of licensed agents fell 58%. The justification for the requirement was that it would improve the cartel’s service to the public. A study just released by Benjamin Powell and Evgeny Vorotnikov concludes this was a sham:

The study found no evidence that either the volume of complaints, or those requiring a response from the board, decreased after mandating the continuing education courses.

In other words, full-time agents changed the law to limit their competition from part-timers and enhanced their own incomes in the process. Sadly, the much-touted benefit to consumers has yet to be seen.



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