Dear Colleagues in Real Estate, there appears to be substantial evidence indicating that certain media platforms, like Inman News, may be selectively presenting information or even suppressing pro-NAR studies that contradict allegations put forth in the class-action lawsuits concerning real estate commissions. We urge all agents to share these counternarratives extensively in a bid to uphold a more balanced and factual representation of our profession.
Stephen Brobeck Study | Introduction
Stephen Brobeck, known for his strong critique of real estate agent commissions and whose studies are often invoked in class-action lawsuits and myriad Inman News pieces, seems to have diverged considerably from his conventional discourse.
In a study titled “Too Many Real Estate Agents For Too Few Home Sales: New CFA Report Documents the Costs to Industry and to Consumers.” Brobeck undermines four years of propaganda.
Brobeck’s Study/Press Release cites, “Washington, D.C. – Today, the Consumer Federation of America (CFA) is releasing a new report – “A Surfeit of Real Estate Agents: Industry and Consumer Impacts,” – that uses industry sources to document the costs to industry and to consumers of too many residential real estate agents. More than 1.5 million residential agents (including brokers) compete for home sales, usually totaling 5 to 6 million annually.”
Brobeck Study…Continued
“A large majority of practicing real estate agents have recently received their license or work part-time,” said Stephen Brobeck, a senior fellow at CFA. “These agents usually charge the same commission rates as experienced, full-time agents yet, in general, offer worse service and deprive experienced agents of needed clients.”
Brobeck Study…Continued
“Those costs include economic inefficiencies, including an inordinate time spent by agents finding clients, RELATIVELY LOW INCOMES OF MANY FULL-TIME AGENTS, frustration by these agents and by many consumers who must deal with inexperienced agents, REINFORCEMENT OF RELATIVELY HIGH AND UNIFORM COMMISSION RATES, and damage to the reputation of the industry.”
Phillips Report Response
We gratefully acknowledge Brobeck’s inadvertent contribution to undermining the ongoing class-action lawsuits’ claims. These lawsuits primarily relied on his studies, asserting that U.S. real estate agents enforce significantly higher charges than their international counterparts.
Brobeck has now transitioned any assessment of damages from flawed“rates” to actual fees paid/net income per agent.
Moreover, how it is possible for full-time agents to simultaneously earn relatively low incomes while imposing relatively high and uniform commission rates. These two scenarios cannot coexist unless there is an attempt to mislead by conflating commission rates with the actual fees paid by consumers.
I suspect Brobeck will not be included in Cohen Milstein’s holiday card list.
Brobeck Study…Continued
Brobeck claims, “In examining home sales in three cities– Jacksonville (F.L.), Minneapolis (M.N.), and Albuquerque (N.M.) — THE STUDY FOUND THAT MARGINAL AGENTS (WITH FIVE OR FEWER SALES A YEAR) received an estimated 25-30 percent of commission income.”
According to data collected by the industry from Realtors in 2021 (in relevant part):
- the median net income of all sales agents was $25,000,
- the median net income of sales agents with less than two years of experience was $7,800
Phillips Report | Response
Currently, Brobeck seems to be in a state of confusion. Initially, he categorizes “marginal agents” as those with five or fewer sales annually. However, in the same breath, he refers to “marginal agents” as those with less than two years of experience. Adding to the perplexity, the study mentions that “the median net income of all sales agents was $25,000,” followed by “the median net income of sales agents with less than two years of experience was $7,800.”
Logic would suggest that the term “all sales agents” should inherently include those with less than two years of experience. The inconsistency raises a question about Brobeck’s understanding of his own assertions.
Phillips Response | Poverty Level Pay | $25,000/Year | $12.35/Hour
Brobeck’s assertion that “the median net income of all sales agents was $25,000” essentially nullifies the alleged substantial damages proposed in all class-action suits. When you calculate the total working hours in a year (253 days x 8 hours/day = 2024 hours) and divide the stated annual income of $25,000 by these hours, the resulting hourly wage is a mere $12.35. This rate is, in fact, on par with the hourly wages of workers at widely recognized fast-food franchises such as Taco Bell. Interestingly, in several jurisdictions, $12.35 per hour doesn’t even meet the mandated minimum wage.
When examining a practical scenario, let’s consider a real estate agent (or an employee at Taco Bell) attempting to rent a 1,190 square feet condominium in The Parker House, Washington DC, with a monthly rent of $2,811. They would need a monthly income of $8,433 to meet the standard income-to-rent ratio of three times the rent. When we calculate this on an annual basis, the income required would be $101,196. Therefore, it’s worth noting that even four real estate agents (or Taco Bell employees) combined might still fall short of the income needed to rent a two-bedroom unit.
Brobeck should retire, seriously.
The Phillips Report | Series
The Phillips Reports are a collection of authoritative opinions solely crafted by Anthony Phillips, aiming to debunk the severely erroneous claims that form the foundation of class-action lawsuits pertaining to real estate commissions. One industry insider has described the Phillips Report as the most striking dismantling of these assertions.
The Phillips Report: Exposing The Latest Defective Claims Asserted By Stephen Brobeck, The Consumer Federation of America Regarding Real Estate Commissions
The Phillips Report: A Critical Examination And Rebuttal Of Claims Asserted In Commission Lawsuits Vs. The National Association Of Realtors
The Phillips Report | Burnett v. The National Association Of Realtors | Missouri
The Phillips Report | Stephen Brobeck of CFA Questions $13.7B Realtor Commission Damages
Author Anthony Phillips
Anthony Phillips, co-founder of Luxury Real Estate Advisors, is renowned in the luxury real estate market of Las Vegas, providing top-tier services to global clients, including private equity firms. In addition to leading 12 Las Vegas HOA Boards, his performance at premier locations earned him a spot in MGM Resorts International’s Elite Developer Circle. As an authoritative voice in real estate, his views have appeared in publications like Forbes and American Genius. Before his current venture, he was an executive at Del Webb, aiding in the construction of over 11,000 homes. Phillips continually enhances his expertise through Executive Education programs at Cornell University and MIT. He hails from the influential Phillips family of New England, known for their varied contributions to law, academia, business, politics, and consumer rights.