Blend Realty Price Fixing and Antitrust
A copy of the request filed with the DOJ and the FTC asking to review practices of Blend Brokerage, Inc.
A copy of the author’s official request that asks the United States Federal Trade Commission, the United States Department of Justice, and the United States Consumer Financial Protection Bureau to investigate Blend Realty (Blend Realty is a subsidiary "shell" brokerage for Blend Labs) and Blend Realty Partner Agents on the grounds of an alleged violation of the Federal Trade Commission Act of 1914 (15 U.S.C. Section 45) an alleged violation of the Sherman Antitrust Act of 1890 (15 U.S.C. Section 1) an alleged violation of RESPA Section 8 (12 U.S.C. 2607) as well as any other possible violations of antitrust and consumer protection laws currently ratified and enforced in connection with alleged broker-to-broker market allocation, consumer allocation, false advertising, unlawful kickbacks, wire fraud, and price-fixing practices.
Attn: Citizen Complaint Center, Antitrust Division
Department of Justice
950 Pennsylvania Ave., NW Room 3322
Washington, DC 20530
Attn: Office of Policy and Coordination
Bureau of Competition
Federal Trade Commission
600 Pennsylvania Ave. NW Room CC-5422
Washington, DC 20580
Attn: CFPB Regulatory Implementation
Consumer Financial Protection Bureau
1700 G St., NW
Washington, DC 20552
Please find the information below with regards to possible antitrust violations.
What companies or organizations are engaging in conduct you believe violates the antitrust laws?
Blend Brokerage, Inc.
415 Kearny Street
San Francisco, CA 94108
Phone: (650) 550-4810
California DRE license 02101769
Further, a partner network of an unknown number of real estate agents who choose to execute blanket broker-to-broker referral agreements in an alleged collusion scheme with Blend Brokerage, Inc.
Acting as the "spokes" within the "hub-and-spoke" broker-to-broker collusion scheme, Blend Brokerage Partner Agents are independent Realtors firmly affiliated with various brokerages such as Berkshire Hathaway HomeServices, eXp Realty, Windermere Real Estate, Keller Williams Realty, Inc., RE/MAX, Coldwell Banker, NextHome, Inc., HomeSmart, Compass, John L. Scott Real Estate, CENTURY 21, Realty ONE Group, Vylla, ERA Real Estate, Weichert Realtors, Better Homes and Gardens Real Estate, Fathom Realty, Intero Real Estate Services, John R. Wood Properties, Worth Clark Realty, Sotheby's International Realty, etc.
Why do you believe this conduct may have harmed competition in violation of the antitrust laws?
Blend Realty operates under a number of brokerage licenses, primarily a California DRE license #02101769, but it does not produce any services that are typically offered by real estate agents and does not represent consumers when buying or selling real estate in any state. In exchange for matching consumers with a Partner Agent, Blend Realty is compensated by the Partner Agent with a blanket 20% percentage of their commission, agreed in advance.
For consumers, Blend Realty promises real estate assistance, supposedly, offers a match with highly rated agents.
For real estate professionals, Blend Realty is a "paper" a "shell" and a "sham" real estate brokerage that does not engage in actual real estate broker services. Blend Realty systematically applies pay-to-play bias towards all matching results, meaning, only real estate agents that have agreed to pay a referral fee are matched with consumers.
In reality, Blend Realty is a broker-to-broker collusion scheme that utilizes consumer information it receives from various mortgage companies. According to the company, “its Digital Lending Platform is utilized by Wells Fargo, U.S. Bank, and over 285 other leading financial institutions.” All Partner Agents agree to pay Blend Realty a pre-arranged referral fee, on all closed transactions, through their employing broker.
A referral agreement between Blend Realty and a Partner Agent for a random transaction that may or may not happen sometime in the future is executed in advance.
Blend Realty engages in consumer allocation, price fixing, and market allocation schemes with Partner Agents’ brokerages, because it is a broker itself. Instead of representing consumers to help buy and sell homes, the company actively disengages from its licensed activities so that every Partner Agent knows that Blend Realty brokerage will not compete with them. According to the company message to brokers, “Never pay for a buyer upfront, only at closing.”
Blend Realty does not act in a real estate brokerage capacity, instead, their real estate license is used to collect a blanket referral fee from the largest number of brokers possible. Sherman Antitrust Act (15 U.S.C. Chapter 1, 2), effectively, requires all active real estate brokers to proactively compete for consumers without entering into agreements that restrain free trade. An agreement or an understanding between brokers not to compete for a mutual profit is a "per se" violation of antitrust regulations in the United States.
It is a per se violation of the Sherman Act for real estate brokers to agree on a “standard” referral fee that will be paid for producing a client. Real estate professionals are not allowed to enter into “standard” referral agreements because such agreements always restrict free trade.
To comply in good faith with RESPA (12 U.S.C. 2607) Section 8 exception for cooperative brokerage and referral arrangements, real estate agents must render referral agreements in a particular instance for a particular transaction.
Blend Realty owes absolutely no duty of care to consumers and takes no responsibility for the transaction, despite receiving a direct financial benefit from the home sale or purchase completed by a referred brokerage.
Actions of Blend Realty directly increase the costs of owning homes in the United States due to added referral fees, consumer allocation practices, and reverse completion between brokers. Partner Agents in the scheme have no incentive to compete for consumers with lower fees, instead, they have an incentive to compete for Blend Realty’ attention. In this scheme, both colluding parties benefit from offering consumers higher commissions. Blend Realty promotes Partner Agents as a way to limit competition with those agents outside of the network, thus limiting free-market competitive forces and steering consumers in self-interest.
Blend Realty rakes in hidden junk fees while consumers are fighting their way through a housing affordability crisis.
As long as referring schemes, such as Blend Realty, are allowed to operate, brokers looking to represent consumers are naturally encouraged to participate in the scheme. “There are no upfront costs, only pay us once the transaction closes,” is an attractive proposition to a broker who acts on this proposition by simply increasing a quoted commission to any consumer who comes as a referral. Any broker who chooses not to participate in such schemes risks losing “free business.” Such an environment is highly poisonous to a healthy real estate representation market.
Blend Realty' referral-only collusion scheme secretly harms real estate consumers and diminishes the efforts of competitive independent agents to provide a tangible service at an independently set competitive price.
As a matter of fair real estate transactions across the United States, there is no excuse to maintain these blanket broker-to-broker collusion schemes established by a handful of “paper” brokers, such as Blend Realty.
The government must treat Blend Realty as a broker because it is paid as a broker and is licensed as a broker. Blend Realty is not a technology company, as it claims since technology companies do not cut into the fees associated with buying and selling real estate. Licensed brokers are not allowed to promote the services of competitors for profit. A broker must promote their individual services directly to consumers and exist to actually help consumers buy, rent, and sell real estate.
Blend Realty may seem like a clever by-pass of RESPA’s prohibition against kickbacks between mortgage companies and real estate brokers, but this loophole is built entirely on blanket referral agreements prohibited by the Sherman Act.
RESPA further requires brokers to act in brokerage capacity in order to pay and/or accept kickbacks. Blend Realty brokerage must offer consumers a tangible service as a licensed broker, but instead, it acts as a “blanket” referral fee intermediary between a large number if random real estate agents and lending institutions. Blend Realty offers “a thing of value” to lenders as a digital channel, while collecting kickbacks from real estate professionals.
All real estate brokers must compete with one another; there is no exception. In the event brokers organize their operations into referral networks, this basic rule of free competition fails – a broker who organizes the scheme, in one way or another, refuses to compete with participants of the scheme.
As long as brokers can trade consumers as “leads” between independent service providers in exchange for blanket referral fees, Open Marketplace™ continues to operate at a competitive disadvantage.
If you have a question or comment about an antitrust issue, you may submit it to the Bureau of Competition at the United States Federal Trade Commission and/or to the Antitrust Division of the United States Department of Justice