Buyer Refunds, Realtor Collusion, and Kickbacks
A copy of the request filed with the US DOJ, the US FTC, and the US CFPB asking to review broker-to-broker collusion practices and kickbacks in residential real estate sector.
A copy of the author’s request that officially asks the United States Federal Trade Commission (US-FTC), the United States Department of Justice (US-DOJ), and the United States Consumer Financial Protection Bureau (US-CFPB) to investigate Zillow Flex Program, Realtor.com (Opcity), Redfin Partner Agent Program, Opendoor Partner Agent Program, Rocket Homes, mellohome, HomeLight, UpNest, Clever Real Estate, Sold.com, Landed, LemonBrew, OJO.com (Digs.co and Movoto.com), Xome.com, Better Real Estate, Tomo Brokerage (hellotomo.com), Blend Realty, RadiusAgent, ReferralExchange, Ramsey Solutions, EffectiveAgents, TopAgentsRanked, FastExpert, AgentPronto, homegenius, AbodeHQ.com, MILLIE (goMILLIE.com), AgentHero, ComeHome, HouseCanary, IdealAgent, Nobul, NAEBA, and similarly situated "shell" real estate brokerages on the grounds of an alleged violation of the Federal Trade Commission Act of 1914, an alleged violation of the Sherman Antitrust Act of 1890, an alleged violation of RESPA (12 U.S.C. 2607) Section 8, 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: Antitrust Division Office of Operations
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
Note: select board members of NAR are cc'ed on this report because the NAR currently misguides consumers with regards to availability of rebates and the way commissions work in the United States MLS-driven real estate information systems. Currently, this NAR page on competition in the real estate states 22 separate times the word "commission" and zero times mentions a word "rebate" from the BAC amounts offered on MLS. This is no coincidence. The NAR currently states that "the listing broker and seller also discuss and agree upon an amount that the listing broker will pay a broker who successfully closes the transaction with a ready, willing and able buyer." This statement is false. All commissions are paid by home buyers and reside in the home buyer's mortgage collecting interest. The listing agent merely offers the cooperating amount via MLS, but the buyer brokers must compete for consumers with independently set pricing, either by offering rebates, or otherwise clearly identifying the amounts in commissions that they receive. This is not what NAR presently distributes to consumers as an information resource, therefore, it too, engages in false advertising. All commissions in the United States real estate sector are negotiable between the real estate agent and their direct client, and not by means of some other element. This report places NAR on record as an active element of massive collusion taking place in the real estate sector. By means of false advertising, the NAR remains an accessory to unlawful broker-to-broker collusion.
What companies or organizations are engaging in conduct you believe violates the antitrust laws?
The following list includes "Alpha" VC-backed hub-and-spoke collusion schemes that receive hundreds of millions USD in payments annually from licensed brokers through sham arrangements (or shell entities) registered as "paper" brokerages in various states.
Zillow Flex
Realtor.com Opcity (dba Opcity, Inc.)
6800 Burleson Road, Bldg. 312, Suite 125
Austin, TX 78744
Phone: (833) 507-7101
Texas TREC License 9005100
Redfin Partner Agent Program (dba Redfin Corporation)
1099 Stewart Street, Suite 600
Seattle, WA 98101
Phone: (877) 973-3346
Washington DOL License 9081
Opendoor Partner Agent Program (dba Opendoor Brokerage LLC)
5307 E Mockingbird Lane, Suite 220
Dallas, TX 75206
Phone: (214) 378-3667
Texas TREC License 9008105
RocketHomes.com (dba Rocket Homes Real Estate LLC)
701 Griswold Street
Detroit, MI 48226
Phone: (833) 297-9378
Michigan LARA License 6505346028
mellohome.com (dba mello Home Services, LLC)
5465 Legacy Drive, Suite 450
Plano, TX 75024
Phone: (888) 946-3556
Texas TREC License 9006745
HomeLight.com (dba HomeLight, Inc.)
100 1st Street, Suite 2600
San Francisco, CA 94105
Phone: (855) 999-7971
California DRE License 01900940
UpNest.com (dba UpNest, Inc.)
856 Mitten Road, Suite 106
Burlingame, CA 94010
Phone: (800) 692-5010
California DRE License 01928572
Clever Real Estate (www.listwithclever.com) (dba Clever Real Estate Inc.)
6358 Delmar Blvd, Suite 300
University City, MO 63130
Phone: (833) 225-3837
Missouri MDPR License 2017042277
Sold.com (dba Ten-X Finance, Inc.)
7700 Irvine Center Drive, Suite 760
Irvine, CA 92618 US
Phone: (844) 355-7653
California DRE License 01937601
Landed.com (dba Landed, Inc.)
148 Townsend Street
San Francisco, CA 94107
Phone: (415) 200-0050
California DRE License 01988003
LemonBrew.com (dba LemonBrew Realty NJ LLC)
720 Monroe Street, Suite C502
Hoboken, NJ 07030
Phone: (833) 536-6627
New Jersey REC License 1863793
OJO.com (www.movoto.com) (dba OJO Home LLC)
1007 S Congress, Building 9, Suite 400
Austin, TX 78704
Phone: (512) 456-8292
Texas Real Estate Commission (TREC) License 9007689
Xome.com Concierge (Mr. Cooper subsidiary) (dba Xome, Inc.)
750 Highway 121 BYP, Suite 100
Lewisville, Texas 75067
Phone: (214) 687-4508
Texas Real Estate Commission (TREC) License 9002330
Better Real Estate (www.better.com) (dba: BRE, Better Home Services, BRE Services, LLC, Better Real Estate, Better.com Real Estate)
3 World Trade Center
175 Greenwich Street, 59th Floor
New York, NY 10007
NY Firm License 10991232130
Tomo (www.hellotomo.com) (dba Tomo Brokerage, Inc.)
801 Barton Springs Rd, 9th Floor
Austin, TX 78704
Phone: (833) 505-1705
Texas Real Estate Commission (TREC) License 9010749
Blend Realty (dba Blend Brokerage, Inc.)
415 Kearny Street
San Francisco, CA 94108
Phone: (650) 550-4810
California DRE license 02101769
RadiusAgent.com (formerly Agentdesks Incorporated)
315 Montgomery Street, 8th Floor
San Francisco, CA 94104
Phone: (415) 829-4200
California DRE License 02051216
ReferralExchange.com TopAgentsRanked.com (DBA ReferralExchange, Inc.)
588 Sutter Street, #350
San Francisco, CA 94102
Phone: (415) 653-5590
California DRE License 01426453
Further, numerous similarly situated "Beta" consumer-facing online hub-and-spoke broker collusion schemes, registered as "paper" sham arrangements (or shell entities) in various states that currently operate under the following Internet domains:
Ramsey Solutions
Effective Agents
homegenius by Radian
Home Story
Ideal Agent
Neighborhoods.com
Estately
Agent Pronto
Fast Expert
Trusty Homes
and others.
Further, a vast number of licensed independent Realtors and real estate agents (aka “partner agents”) who choose to execute blanket referral agreements in participation with any "shell" real estate brokerages registered in any state. Colluding 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.
How do you believe they have violated the federal antitrust laws?
Genuine Realtor commission rebates benefit consumers
A commission rebate is a legal financial mechanism that allows buyer agents to compete for home buyers' attention. Real estate commission rebates are perfectly legal in 40 US states and Washington, DC. A commission rebate is the same thing as a buyer refund and a buyer rebate, stated differently.
A properly negotiated commission rebate is not a kickback because the money is returned to the home buyer instead of a third party to entice the buyer. A buyer commission rebate can easily be the largest savings amount available to home buyers when purchasing a home. To forgo negotiations of this incentive could cost a home buyer tens of thousands in overpriced commissions.
The reason why this rebate exists has to do with the way buyer agents are paid when helping consumers buy homes. Buyer agents are offered a "blanket" incentive called BAC (Buyer Agent Commission) which is typically set at 2.5% to 3% of the home price, where home sellers and their listing agents decide the commission to be paid to the buyer broker working with the home purchaser. Buyer agents never work for free.
The BAC amounts are offered via MLS to attract more buyers. In this proposition, buyers pay for all closing costs (including all commissions) because they are writing a check (or taking out a mortgage) for the total home sale price, yet they are unable to negotiate the BAC rate upfront. Therefore, the rebate creates an opportunity to turn the "blanket" commission paid to the buyer agent into a competitive rate. The rebate allows buyer agents to compete for buyers and it allows buyers to save thousands when buying a home.
Without the "coupled" BAC structure, buyers would have to pay buyer agents "out-of-pocket" making it incredibly difficult for first-time buyers to purchase a home. The reason why the BAC structure benefits homebuyers is exactly because it is "rolled" into the mortgage as a form of a "seller's concession."
The hard fact is that in the case BAC structure is eliminated, home buyers will be left severally unprotected - they will be steered by the listing agents to make overpriced home offers, they will not negotiate repairs, they will not be able to afford "out-of-pocket" expense of the right buyer agent representation required to make an informed home purchase.
There are zero ways to include the BAC as an "out-of-pocket" expense into the mortgage. This violates several fair lending rules since all loans must be issued against the true value of the property, not the value of the property plus something else. Even as it stands, a buyer rebate requires lender approval.
To pay for buyer agent services "out-of-pocket" the buyer can (1) reduce down payment to decrease out-of-pocket expenses at closing (2) attempt to negotiate a "concession from a seller" where the seller agrees to pay BAC on the buyer's behalf. These are the only two options.
A consumer can sometimes "roll" her closing costs into a refinance as long as the added costs do not exceed the lender's loan-to-value ratios, etc. That is possible because the owner has some equity built-in into the original loan. A new buyer, on the other hand, has exactly zero equity at closing. Therefore, a lender cannot allow a new buyer to "roll" any "out-of-pocket" expense into the mortgage, at the risk of breaking several lending regulations, including the Dodd-Frank Act.
The BAC structure allows the buyer to "roll" the cost of the buyer agent into the mortgage because it is structured as a special case "concession from the seller" built into the price of the home. This mechanism is beneficial to sellers and buyers. This structure, unfortunately, is also ripe for abuse because it breeds the notion that "buyer agents work for free."
The buyer refund is a tax-free incentive that allows the home buyer to turn a "blanket, non-negotiable offer" of the Buyer Agent Commission (BAC) into a competitively negotiated buyer agent compensation structure.
In 2007 the IRS has ruled that that commission refunds to home buyers are not taxable. The IRS position is that payment or credit at closing to the home Buyer represents an adjustment to the purchase price of the home and generally is not includible in a home buyer's gross income.
Currently, 40 US states and Washington DC allow buyers to negotiate rebates. For the BAC structure to be 100% competitive everywhere, all 50 US states and Washington DC must allow Realtors to offer rebates to buyers.
As of 2021, the list of ten states where buyer rebates are prohibited includes Alabama, Alaska, Iowa, Kansas, Louisiana, Mississippi, Missouri, Oklahoma, Oregon, and Tennessee. Within the borders of these ten US states where home buyer rebates are presently banned, coupled commissions structure, by default, are anticompetitive.
However, even in these ten states, listing agents can offer any listing rates to sellers. In these ten states, buyers should still work with a buyer agent, otherwise, the listing agent will represent the buyer as a dual agent and receive the entire commission from the sale - her full listing rate plus the full Buyer Agent Commission (BAC) amount. A dual agency is not a good thing for home buyers.
Kickbacks from Realtor commissions harm consumers
As of 2021, the online real estate sector remains heavily buried in kickbacks, antitrust violations, consumer brokering, and price-fixing.
For comparison, real estate commissions cost consumers about $85 to $100 billion each year. $15 billion of this money is lost to kickbacks. That’s right, this $15 billion is not given back to consumers as buyer rebates and listing savings, but instead pocketed by a handful of broker collusion schemes (aka referral fee networks) as illicit kickbacks.
In effect, both, kickbacks and rebates, are the same money going into the bank accounts of either consumers or bank accounts of broker referral fee networks. Every dollar spend in kickbacks is twice that in lost savings because these schemes not just funnel money into the wrong hands, they also keep commissions unreasonably high.
The same Realtors that claim that they "deserve their full commission" also readily give as much as 40% of their future commission as kickbacks to get consumers' information from a handful of "no up-front costs" networks that operate as "shell" or "paper" real estate brokerages. This happens because the Realtor is able to easily overcompensate for the cost of the kickback with an inflated commission rate.
Agents often say that they expect "full value" of their commission due to years of experience, etc. There are no standard commissions and all commissions are negotiable (outside of the ten states I mentioned where negotiated buyer agent rebates are banned.)
Referral fee networks operate by cutting Realtor commissions significantly and some argue that 25% to 40% kickbacks are "standard" in the industry. Some of these networks further engage in price-fixing of services provided by independent Realtors to entice consumers into using the scheme. Price fixing and consumer allocation between licensed brokers are a felony. Nonetheless, some of the largest real estate companies (such as Opendoor.com Brokerage, Redfin.com Partner Program, and Realtor.com-Opcity) openly engage in price-fixing.
RESPA (12 U.S.C. 2607) Section 8 and U.S. Code of Federal Regulations 12 CFR Part 1024.14(g)(v) narrowly allows payments pursuant to cooperative brokerage and referral arrangements between real estate agents and real estate brokers. This limited exemption on kickbacks only applies to fee divisions within real estate brokerage arrangements when all parties are acting in a real estate brokerage capacity.
In order 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. Two brokers, acting in a real estate brokerage capacity, may discuss a commission split or referral fee only for a specific transaction at hand.
For example, if a legitimate Realtor associated with Compass Brokerage from Los Angeles, CA wants to refer a client to legitimate Realtor affiliated with RE/MAX in New York, NY, they can easily do this as a one-time individual referral. What they cannot do is start forming a network of agents around the country and allocate consumers to those competitors with use of blanket consumer allocation agreements. Only a legitimate and an impartial marketplace can aggregate services of competitors. Realtors can only promote their own self-performed services, just as any other professional or a company in any other industry.
A number of broker-to-broker collusion schemes have developed over the last several years, and many comprise of tens of thousands of brokers in their referral networks. Some "paper" brokers setup fees structures and buyer rebates to entice consumers with savings. In reality, these price-fixed savings are a "dangling carrot before the nose" of consumers.
Consumers end up overpaying tens of thousands in fees in these "fake" savings compared to the open market rates available to them elsewhere. The underlying reason for this, of course, is that the consumer ends up hiring two brokers for the work of one. A referral fee network is interested in getting the largest referral fee possible, so any agreements that are made there, in fact, are a form of a hub-and-spoke conspiracy between brokers.
A typical referral fee network easily fools consumers and heavily advertises with Google Ads such as this:
"Unbiased. Get Data Driven Results. Our Agents Can Get You the Best Deals. Sign Up Now! Save Time & Hassle and Get Matched to the Perfect Agent for Your Needs. Find Quality Realtors. Top Agent Rankings. Personalized & Fast. 100% Free. Top 5% of Real Estate Agents Compete to Sell Your Home. Save Thousands."
Such ad may cost a few cents on Google, but it returns tens of thousands USD in kickbacks once the consumer is hooked. This ad is created by a "shell" real estate brokerage that advertises services of a network of competitors to gain a cut of their commissions.
In reality, all such "matches" are 100% biased, pay-to-play collusion steering mechanisms between licensed brokers, and they all cost consumers tens of thousands compared to open market savings. These "paper" brokers do not connect consumers with anyone outside the network, in fact, they specifically steer consumers into the network in exchange for massive kickbacks pre-negotiated in advance.
Hub-and-spoke collusion between licensed Realtors
Collusion is the polar opposite of competition. These two very different principles have always co-existed in one form or another because both of these principles function to produce revenue. The question is how. Common collusion is typically secretive: nobody wants to be accused of collusion, it is illegal in most modern economies, and consumers do not like to deal with dishonest businesses.
However, collusion does not have to be secretive, per se, it merely must deceive. On the Internet, the information is generally open: anyone can post anything, under some basic outliers such as the prohibition of trademark infringement, defamation, or slander. Under that same principle, anyone can develop products and advertise products that way they see fit, again with some basic outliers, such as a prohibition against price-fixing, consumer allocation, bid-rigging, and tying.
Unfortunately, many concepts are often "washed" on the Internet to create an appearance of legitimacy: fake news, fake marketplaces, fake currencies, etc. As of 2021, the Internet remains a breeding ground for setting prices of competitors for profit, opportunities to kickbacks, and misrepresentation of relationships between third-party providers on the platforms. These schemes are not devised in secrecy, they are openly promoted in a highly deceptive manner, in an active effort to hide what they aim to produce.
In business, collusion requires rival companies (that otherwise would not work together) to agree to cooperate for their mutual benefit. This action typically isolates the belligerents from the rest of the market. Remarkably, there are only a handful of ways collusion functions. The following are the four most common pathways identified by antitrust experts that always involve collusion:
(1) Agreements to refrain from participating in business activity to reduce competition and gain higher profits
(2) Agreements to fix prices at any level (below or above market) for business activity to reduce competition and gain higher profits
(3) Agreements to refrain from selling a product or a service to a certain set of customers to reduce competition and gain higher profits
(4) Agreements to pool products and services into a common channel to reduce competition and gain higher profits.
The Internet is an excellent medium for collusion because it can unite thousands of independent service providers and pool their resources under such common agreements that restrain free trade. The scalability of technology makes it "worthwhile" to develop a common agreement and deliver it into a common channel because it can attract thousands and sometimes millions of small-business belligerents into a common scheme.
In any trade, including real estate representation services, collusion is a federal crime. The collusive agreements made between business owners erase strong, yet brittle, forces of competition by limiting bargaining power and choice for consumers.
If collusion systematically outperforms forces of competition, consumers are harmed by the mere fact that newer and more competitive models are simply outnumbered by businesses "networked" into mutually beneficial arrangements.
"Hub-and-spoke" conspiracies on the Internet are especially dangerous because they affect a large number of small businesses, harming not just consumers and legitimate small businesses, but also their own "spokes" - small businesses that are dull enough to participate. The "spokes" typically engage in such collusion out of necessity, rather than evil motives to deceive. Nonetheless, the "spokes" are just as guilty of collusion as the "hubs."
To counter common excuses for "good intentioned collusion" by the belligerents, price-fixing and consumer allocation agreements in the United States are illegal "per se" regardless of whether they are reasonable or not. Whatever economic justification particular price-fixing agreements may be thought to have, the law does not permit an inquiry into their reasonableness. They are all banned by the virtue of the Sherman Antitrust Act.
The Sherman Act imposes criminal penalties of up to $100 million for a corporation and $1 million for an individual, along with up to 10 years in prison, in addition to trebled damages.
Hundreds of thousands of Realtors are currently involved in collusion
Hundreds of thousands of Realtors presently engage in collusion. Kickbacks are now rampant in online real estate because some of the largest MLS aggregators, including Zillow.com Flex and Realtor.com ReadyConnect (Opcity) have recently (as of 2018) started to utilize blanket referral agreements with a vast number of competing brokers to steer consumers in exchange for 30% to 40% of the brokers’ gross commissions. These hidden fees are only made good with highly inflated commissions.
In the past, Zillow.com has firmly claimed that it has "no skin in the game" of commissions and that it merely sells ads to Realtors. This is no longer the case. As of 2018, Zillow.com Flex operates a "shell" brokerage that collects massive kickbacks from Realtors.
HomeLight, another vivid example, has now claimed to refer about $20 billion (as of 2021) since inception of the scheme, promising "free and unbiased" service. The "standard" 25% referral fee attached to these $20 billion equals to $5 billion in kickbacks collected by HomeLight. Almost all of it is pure profit since HomeLight has not helped a single consumer to buy or sell a home. HomeLight, Inc. is a licensed California brokerage that expands nationwide, but does not have a single legitimate agent in any of the 50 states and Washington, DC. HomeLight operates via consumer allocation agreements signed in advance with a network of local brokers around the country. This product is built entirely to steer consumers in self-interest, it is not built to promote competition, and it never will.
HomeLight is one of the greatest real estate scams in modern history.
MLS-tied "shell" brokers are responsible for an even greater share of kickbacks as well-known entities.
According to the Redfin website, as of June 2021, 85,000+ customers bought and/or sold homes with Redfin Partner Agents, which yields about $50 to $100 million in kickbacks annually. Redfin went as far as making their collusion agreement with Re/MAX a selling point, and that announcement is still openly published on Redfin's website.
Since 2004, Redfin Partner Program was the first online broker collusion scheme that scaled into tens of millions of US homes. People intuitively think that Redfin saves money, and it doesn't - it costs money. Over 40% of all transactions originated by Redfin are farmed out to random competing brokers. Redfin only operates as a brokerage in select areas, everywhere else it uses "partner agents" from RE/MAX, Compass, Century 21, KW, etc.
"Yes. It’s not something we broken out into a lot of detail, but generally you should think of revenue from partner transactions as having very high gross margin because the cost to serve the customer mostly comes from the agent who does that, not someone from within Redfin. So again, we haven’t broken it out, but you can’t certainly use that assumption that as very high gross margin on the partner business and disentangle it using that." This is an excerpt from a statement by Chris Nielsen, Chief Financial Officer at Redfin, who openly admits in Q2 2021 earnings call that collusion with competitors is a "high gross margin" revenue source for the brokerage because the cost of a tangible service "to serve the customer" does not exist for the "hub" that administers the scheme.
The BIG underlying problem here is that Realtors would much rather collude with "no upfront costs" with these schemes and give up 40% of their future commissions into a referral fee network than to offer these same amounts as savings to their clients. The reason for this is that each transaction is handed to a Realtor at no upfront cost and often brings in tens of thousands to a broker. A Realtor would rather lose 40% of this large fee for a 100% certainty of receiving 60% of the gross commission, instead of offering 40% as savings to their client. The only way to prevent this is to stop brokers from being able to pool together to form referral networks, meaning, to enforce the Sherman Act.
Let’s examine one of these schemes with real numbers. Realtor.com ReadyConnect (Opcity) is a broker collusion scheme that administers a "Client Rewards" program that entices buyers with miniature price fixed rebates (I call them a carrot before the nose "rewards".) Opcity is a "shell" brokerage that has transformed legal buyer rebates into a price-fixed schedule of fake rebates where, for example, Opcity price fixes a rebate at $12,000 when buying a home worth $4 Million and up (this info is public.) Tens of thousands of Realtors in the network agree to this price-fixed schedule.
Belligerent Realtors do not pay anything up-front to be part of this scheme, but they must agree to the terms in advance. These Realtors do not compete via Opcity with one another. The scheme orchestrates an app-based system where leads a distributed and claimed by Realtors. From Opcity's own description of the service, the nature of the process could not be clearer: "We send a lead alert via text or mobile push notification to the agent 1st in the queue. That agent has approximately 5 seconds to click-to-claim the lead alert before the 2nd agent receives a lead alert and can also click-to-claim the lead. 5 seconds later, another agent is alerted, and so on." Opcity is a Texas brokerage, but it does not represent consumers, and this rebate schedule is set for all brokers in the network at the same amount. Here is how the scheme translates into massive losses to consumers.
Let's say, you decide to buy a $4 million home in Washington, DC and use Opcity "partner agent" that you were matched with when you filled out a contact form on Realtor.com listing. The Buyer Agent Commission (BAC) on a $4 million home is about $120,000. In this scheme, Opcity takes $42,000 as a kickback, you, the buyer, get $12,000 back as a price-fixed rebate, and your buyer agent "nets" $66,000 after the kickback and price-fixed rebate. These three numbers summed up together, is $120,000 in total.
Subject to elementary math, on the open market, the buyer would get back $54,000 as a full competitive rebate without the Opcity kickback, simply by converting kickbacks into savings. The Opcity exists to funnel the savings into the wrong bank accounts. This is where the real harms of price-fixing of commissions and kickbacks are so clearly evident - a buyer receives only $12,000 and not the $54,000 that they should get.
This is just one example, and obviously, most homes in the US are priced lower (the average price of a US home is about 360K right now.) Still, these price-fixed incentives are working against the consumer in any price range because this schedule is not an open market, it is a hub-and-spoke conspiracy between licensed brokers priced-in for a kickback.
Opcity is one of the most profitable real estate brokers in the country, and it has not helped buy or sell a single home - it sells competitors for profit via Realtor.com traffic. News Corp subsidiary Move Inc., operator of Realtor.com, purchased Opcity in 2018.
The basis for damages described here violate some of the most crucial antitrust and real estate consumer protection regulations in the United States, including: Federal Trade Commission Act of 1914 (15 U.S.C. Section 45), Sherman Antitrust Act of 1890 (15 U.S.C. Section 1) and RESPA Section 8 (12 U.S.C. 2607), and related unfair or deceptive advertising, business and professions federal and state regulations. Both, the handful of "shell" broker entities and hundreds of thousands of colluding independent Realtors violate these laws equally.
Better Real Estate (Better.com subsidiary), mellohome (loanDepot subsidiary), Xome (Mr. Cooper subsidiary), Rocket Homes (Rocket Mortgage subsidiary), etc. are particularly problematic schemes because kickbacks flow from real estate brokers to mortgage companies by means of a "paper" brokerage. This is a very dangerous trend. The entire RESPA was created to stop such a flow of kickbacks from taking place in 1974. In this case, a mortgage company creates a "shell" brokerage and receives kickbacks from random Realtors to bypass RESPA regulations. This scheme falls apart ONLY because each one of these "paper" brokers violates the Sherman Act by colluding with thousands of Realtors all at once. RESPA is technically violated as well since the "cooperative brokerage exemption" between licensed brokers does not extend to "shell" entities.
The validity of these violations is strongly supported by the Consumer Federation of America (CFA) report, published in September 2020, titled: Real Estate Referral Fees, Unknown to Most Consumers, Contribute to High, Uniform Commission Rates
My main report addressed to the FTC, DOJ, and CFPB on the issue was published in December 2019, titled: Blanket Referral Fees in Online Real Estate
There are also a number of individual reports, broken down by the scheme, for most well-known entities that operate "shell" and "paper" brokerages to collect massive kickbacks from consumers' transactions. These reports include the following:
Zillow.com Flex Consumer Allocation and Antitrust
RocketHomes.com Consumer Allocation and Antitrust
Redfin.com Opendoor.com Consumer Allocation and Antitrust
Redfin.com Partner Agents Open Collusion
Realtor.com ReadyConnect (Opcity) Antitrust
Better.com Price Fixing and Vertical Tying
Xome.com Concierge Price Fixing and Antitrust
Blend.com Realty Price Fixing and Antitrust
loanDepot.com Consumer Allocation and Antitrust
OJO.com Consumer Allocation and Antitrust
HomeLight.com Consumer Allocation and Antitrust
Tomo (hellotomo.com) Price Fixing and Antitrust
UpNest.com Price Fixing and Antitrust
Clever Real Estate (listwithclever.com) Price Fixing
Further, numerous similarly situated "Beta" consumer-facing online hub-and-spoke broker collusion schemes, registered as "paper" sham arrangements in various states that currently operate under the following Internet domains. Consumers should take care to avoid dealing with the following "shell" broker collusion scams:
www.RamseySolutions.com
www.EffectiveAgents.com
www.TopAgentsRanked.com
www.MyAgentFinder.com
www.FastExpert.com
www.HomeGain.com
www.AgentPronto.com
www.AbodeHQ.com
www.goMILLIE.com (dba www.AgentHeroRealty.com)
www.HouseCanary.com (dba www.ComeHome.com)
www.NestReady.com
www.IdealAgent.com
and, seemingly, dozens of others.
The buyer rebate is one of the largest cash incentives available to consumers when purchasing a home. The commission kickback is one of the largest cash drains when purchasing a home. The bulk of online real estate portals are "shell" brokers that aim to take savings away from consumers and rake the transaction with hidden kickbacks, unlawfully.
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.
If you have a question or comment about federal consumer protection financial laws, including RESPA, you may submit it to the Office of Enforcement of the United States Consumer Financial Protection Bureau