Key facts
- Online real estate platforms may be engaging in deceptive practices by not fully disclosing fees and steering practices to consumers.
- Practices under scrutiny include referral fees to platforms, steering buyers to affiliated lenders, and the use of private listings.
- The senators argue that these undisclosed costs are financed into 30-year mortgages, significantly increasing the overall cost for buyers.
- The median existing-home price in the US is approximately $440,600, with a median monthly mortgage payment of $2,199.
- Homes marketed on the MLS sold for approximately 17.5% more than comparable homes not marketed on the MLS, according to research.
US Senators Elizabeth Warren and Cory Booker have urged the Federal Trade Commission to investigate what they describe as deceptive practices within the online real estate marketplace. In a letter obtained by HousingWire, the senators highlighted three specific issues: "contact agent" buttons that may route buyers to platform-affiliated agents who share commissions with the platform without disclosure; the expectation for platform-affiliated agents to steer buyers toward in-house or affiliated lenders, potentially offering less favorable terms; and the use of private or office exclusive listings that limit the visibility of homes to potential buyers and reduce competition for sellers. The senators contend that while these practices are not inherently illegal, they become deceptive when consumers are unaware of the associated costs, which can be financed into long-term mortgages. They cited the current market conditions, including a high median home price of approximately $440,600 and a median monthly mortgage payment of $2,199, to emphasize the financial burden of these undisclosed fees. The senators' concerns are framed against the backdrop of a tight housing market where affordability is a significant challenge.