Brokers Jack up Prices?
By Jim Palmer Jr.

In the real estate business, brokers are frequently besieged with negative comments from folks who have little understanding about what influences a rising market.  In a stimulant-infused gab session, one such heckler emphatically insisted it was real estate brokers who push the market upward, as if they have control over market trends.  From what I could ascertain, the intent of the terse claim was to blame brokers for being greedy by over pricing listings so they could make more money.  Boy, don’t we wish we could be that influential!  The market would never have a down swing if that were true!  Most reasonable people understand that is a silly notion!

Supply and demand is what drives the market swings.  The robust upswing in the general economy over the past four years has made a huge difference and caused the severe lack of supply that we are now experiencing, making prices rise dramatically.  But every time there is a spike in prices, there is eventually a compensating purging effect and a down swing that follows.

Hecklers might consider this story; recently in a frenzied bidding war, six eager buyers escalated their offering price until there was a winner at a price well above the original listed price.  The Realtor® who provided the market analysis and subsequently listed the property did not set the starting price, the seller did, and the winning buyer who was willing to pay the ultimate price was really the one who decided how much the property was worth.

So who was the greedy one in this scenario, the Realtor®, the seller, or the buyer who just had to have this particular property?    Some might say the buyer is the victim because they are forced by market conditions to bid high in order to obtain a place to live, but it’s hard for me to see this winning buyer as a victim.  The buyer got what they wanted.  The seller got more than they expected, and the Realtor® got paid exactly what they contracted for.

The truth is that brokers don’t jack up listing prices.  Consumers will always reject a practice like that, especially if the pricing is out of line with market norms.  Sellers generally do want to push the market upwards, but they only get away with it when there is that one willing-and-able-buyer who decides what a property is worth to them.