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What constitutes predatory pricing among real estate agents?

Asked in Provo, UT - about 1 year

It is becoming more and more common for real estate agents to pay rebates from their commissions to clients in residential transactions. The way the internet is evolving, this is turning almost turning more into real-time bidding online for find new customers. Are there any circumstances where there might be predatory pricing issues where real estate agents give commission rebates and incentives online, based on prices of otheres?

Attorney Answers (1)

Edward Xavier Junia

Edward Xavier Junia

Saint George Real Estate Attorney

Licensed in UT

Answered about 1 year ago. It would seem to me that the only way that this would fall into the Predatory Pricing category would be where a few dominant agencies in one area would advertise such incentives in an extremely comprehensive manner that is so significant that other agents could not compete in the long term. I am not aware of any locations where there are so few agencies that one or more could control the market. In my experience, in most areas there are so many agents and agencies that no one or two agencies would have enough market power to control the local market.

Further, I think in most locations that the reality is the dominant agencies would have large offices, staff and organizations that would make it difficult for them to offer such commission pricing for a long enough term to impact the market. Also, in most geographical areas there is a Board of Realtors to which most real estate agents belong so as to participate in the Multiple Listing Service (MLS) where commissions offered by members are easily seen by other members and seems to result in commissions that are consistent from one agency to another. One might argue that the MLS offers agents the opportunity to fix commission prices. So, the advent of the internet in Real Estate can be seen as offering clients an opportunity for more competition on pricing of commissions not less competition. With all the electronic data, documents, training, advertising available through the internet I see the larger agencies being pressured by the small nimble offices that do not have a lot of expense associated with their offices.

I just do not see this falling into the Predatory Pricing concern. Also, most states prohibit paying of referrals to non-licensed persons so other than commission reductions to clients I am not sure there is much one can do except offer lower commissions to sellers and reduce the amount of commission received from a seller to the agent's buyer.
This information is for discussion purposes only and does not constitute legal advice nor does it establish an... more
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