(The Center Square) – U.S. Sens. Cory Booker and Elizabeth Warren want the Federal Trade Commission to look at whether online real estate companies use deceptive practices that raise homebuying costs.
Booker, D-N.J., and Warren, D-Mass., sent a letter to FTC Chairman Andrew Ferguson this week. They asked the agency to investigate how real estate websites connect buyers with agents and mortgage lenders, and how brokerages handle private home listings.
“We urge you to now investigate anticompetitive and deceptive practices in the home-buying market, using every enforcement tool available to restore competition to the entire online real estate marketplace,” the senators wrote.
It comes as U.S. Rep. Ben Cline, R-Va., had similar concerns. In June, he asked Ferguson to investigate online agent referrals and mortgage lending practices, HousingWire reported.
The senators found three practices they want the FTC to investigate.
First, they said buyers who click a website’s “contact agent” button may reach an agent who pays the website part of the sales commission rather than the agent selling the home. The senators say that can raise costs without the buyer even knowing.
“Platforms and agents do not disclose these commission-sharing arrangements, leaving buyers unaware that they are agreeing to pay inflated prices to cover the platform’s revenue cut,” they wrote.
Second, the senators said agents often must refer buyers to lenders tied to the websites. Those lenders often aren’t upfront about their financial incentives and charge higher rates and offer worse loan terms.
Also, they criticized brokerages that have private home listings, showing homes to a select few buyers before making listings public.
The senators said doing this hurts prospective homebuyers and sellers. The sellers can get fewer offers when fewer people know their home is for sale.
Zillow has denied that these services hurt buyers.
Responding to the lawsuit, Zillow said buyers can choose their own agents and lenders. Zillow added that every home listing lets buyers directly contact the listing agent.
“Buyers are never required to work with that agent and remain free to choose anyone they prefer,” Zillow wrote.
The senators also cited the FTC’s rental advertising case against Zillow and Redfin.
The FTC accused Zillow of paying Redfin $100 million to stop competing in rental advertising. An August settlement forced Redfin to restart that business and invest millions in it.
Booker and Warren want similar FTC action in the home sales market.
They said high housing costs are another reason the FTC should investigate. They noted recent National Association of Realtors figures showing the median existing-home price is now about $440,600 and the median first-time homebuyer age is 40.
The senators said higher fees and mortgage rates make buying a home harder. They said those costs are even worse when buyers add them to their mortgages and pay interest on them.
“Younger and first-time homebuyers are most harmed by these practices,” they wrote. “They are making the largest financial transaction of their lives without knowing the full picture.”