The CFA and CU Team Up With Realtors Cartel to Fight Consumer-Friendly Fees
Online, October 20, 2010 (Newswire.com) - by Victor Fava
It is both shocking and puzzling that earlier this week the Consumer Federation of America (CFA) and Consumers Union (CU) teamed up with Realtors, who CFA has publicly declared as "the last unregulated cartel in America" (See Consumer Fed Report).
The Coalition to Stop Wall Street Home Resale Fees - a paper coalition formed by the National Association of Realtors (NAR) and the American Land Title Association (ALTA) to attempt to mask the self-interest in their fight against private transfer fees - announced on Monday that both groups had joined its effort (Read the announcement here). It is hard to understand how either CFA or CU, which portends to stand on the side of consumers, can join with the National Association of Realtors in this fight to protect their high fees and destroy a consumer friendly real estate financing tool.
The 1 percent private transfer fee (PTFs) has many consumer benefits, as detailed on the website of the Coalition to Preserve Community Funding which supports PTFs:
• Private Transfer Fees lower the cost of home ownership, by lowering the initial sales price, closing costs, Realtors fees and interest payments on the mortgage loan;
• Private Transfer Fees support community non-profits by dedicating 5 percent of every transfer fee covenant to community groups; and
• Private Transfer Fees help restart stalled developments and put construction workers and other laborers back to work;
The criticisms leveled against PTFs by the Coalition to Stop Wall Street Home Resale Fees apply even more to the Realtors fee - which is 6 to 7 times the size of the PTF: "The fee is paid even if a homeowner has no equity remaining, or if they are losing money on a home sale. The fee is paid on the entire sales price, even if the seller made renovations or additions to the property that significantly increased the value of the property."
At the same time, the significantly larger Realtor's fee:
• Has no impact on the price of the home and, consequently, no chance of being recovered by the home buyer;
• Has no portion dedicated to community groups;
• Has no ability to revive stalled projects or stimulate jobs.
In issuing its 2006 report titled State Real Estate Regulation: Industry Dominance and its Consumer Costs CFA publicly asked: "First, why does a typical real estate commission exceed the price of many new car models, or extensive medical procedures, especially when commission rates are far lower in most other industrial countries. And second, why do traditional brokers in an area try to charge the same rate regardless of their experience, competence, level of service provided, or role that ranges from fiduciary agent to facilitator?"
I would like to publicly ask: How can CFA and CU stand with this cartel to oppose private transfer fees, which truly benefit consumers? Why are we not all fighting against Realtors fees?