July 22, 2021 11:39 AM ET
Michael Thoth is right about the harm consumers pay to real estate buyers (“Real estate cartel warning, ”Op-ed, 9 July). But including these commissions in the price of the home allows buyers to finance them with a tax deductible interest.
Reforms can preserve this convenience while solving the problem. Rather than being forced to offer a flat commission (say 3%) to all buyers’ agents, sellers can be exempted to offer a dollar ceiling or percentage, and buyers determine the actual amount. This will restore incentives for buyers to negotiate with their own agents, as they may lose the house to another buyer who pays the seller more and the agent less.
Better yet, buyers contract directly with their agents for whatever fees they wish to pay, with an amount that is then added to the escrow. This will leave the seller aside, which makes sense. Agents should be paid transparently by those whose interests they represent.
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