In re: Real estate agents and the housing bubble

Good article Bubble-lusions in Slate by Austan Goolsbee, an economics professor at the University of Chicago, about why despite the fixed 6% fee that real estate agents make (split between buyer and seller agents) they aren’t making more money with a market that had been booming. The reason that Goolsbee provides is known as the “zero-profit condition” that with no barrier to entry into the real estate agent market, anyone who can pass the test and pay the small fee can enter and will continue until no money is left. Thus in high priced markets a flood of new agents have come in which has reduced the number of homes per agents. The article also discusses how the Department of Justice is planning to come down on the association of realtors for antitrust violations in the lack of price competition


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