Encouraging Price Competition Among New Jersey's Residential Real Estate Brokers: Reforms to Promote the Growth of Alternative Brokerages and Reduce Transaction Costs
30 Pages Posted: 15 May 2009
Date Written: April 7, 2009
New Jersey, like most of the country, needs an increased level of price competition among residential real estate brokers to reduce transaction costs associated with buying and selling a home. The best way to achieve price competition is through changing the state's legal and regulatory environment to encourage the growth of alternative brokerages. Three changes are necessary to accomplish this goal. First, the Legislature must pass an Assembly bill that legalizes the use of consumer rebates, as New Jersey is one of the few states that disallows this form of buyer-side price competition. Second, the New Jersey Real Estate Commission (NJREC) should adopt a number of new measures to increase consumer awareness of the anti-competitive practice of steering. Third, the NJREC needs to proactively investigate steering and punish those brokers who behave anti-competitively. If New Jersey adopts this framework, the increased price competition sparked by the changes would allow home buyers and sellers across the state to save substantial amounts on commission costs.
Keywords: New Jersey, residential real estate brokers, transaction costs, steering, rebate ban, NJAR, competition
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