As the Consumer Federation of America concluded in a recent report, will marginal agents (defined as those who sell five or fewer homes per year) disrupt the residential real estate industry for everyone, including consumers? ?

Or is this just an argument to try and get a bigger piece of the pie from realtors who sell more?

Hiten Samtani of The Real Deal analyzed the CFA report in detail, which, after examining five mid-markets, said that fringe agents, who account for about a quarter of residential commissions, are impacting service quality and perceptions in the industry, And negatively affect consumers due to inexperience. Professional agents must work harder and devote more resources to acquiring clients, the report said.

But Samtani said the CFA’s conclusions read like an ad for the National Association of Realtors. Additionally, Samtani noted that NAR commissioned a report in 2015 that found fringe agents damaged the industry’s reputation, which sounds dubiously similar to the CFA’s conclusions.

NAR routinely invokes free market principles to resist any outside regulation. Calling for fewer fringe agents — namely, soccer moms or part-time teachers — doesn’t seem like free market talk at all, however.

“Wouldn’t free market principles dictate that the best agents rise to the top no matter what’s out there?” Samtani asked. “NAR is not the Marine Corps.”

Ted Glazer

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