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Realtor Cartel Update: Massachusetts April 25, 2012

Posted by federalist in Real Estate.
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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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