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Long term price gouging for services occurs with some companies,even when there is not an emergency.
The way that the company accomplishes this is by heavily advertising on TV and by enticing mailers generally with a coupon.
Frequently old people are the victims,or if an emergency people choose not to get additional estimates.
Supply and demand does not come into play when there is not a central market to display prices such as Ebay,Amazon or even Google listings.
Many people when something is broken and the tradesman is at their home and can fix it now do not choose to price shop.
Generally companies that have a history of charging prices that are beyond expensive have a numerous complaints and settlements with consumer affairs.
Those are NOT examples of price gouging. Advertising is meant to move the demand curve up but that is all advertising - that is not "gouging" or "ridiculously priced" - again supply / demand curve determines price.
It is not about what you feel the price should be, it is about facts and the facts don't support your "feelings", those industries do not meet the definition of price gouging.
Long term price gouging for services occurs with some companies,even when there is not an emergency.
The way that the company accomplishes this is by heavily advertising on TV and by enticing mailers generally with a coupon.
Frequently old people are the victims,or if an emergency people choose not to get additional estimates.
Supply and demand does not come into play when there is not a central market to display prices such as Ebay,Amazon or even Google listings. Many people when something is broken and the tradesman is at their home and can fix it now do not choose to price shop.
Generally companies that have a history of charging prices that are beyond expensive have a numerous complaints and settlements with consumer affairs.
the plumber just randomly showed up at your house? Or, you called them to come out, and they took the time to do so?
I don't know if they do it for very town, but Angie's List publishes something like a "what does a plumber cost in your area?" for many places.
I tend to agree about RE agents but I can't really say for sure, from the outside looking in. I've used several.
Plumbers earn their money, IMO. I wouldn't want to do it!
Funeral parlors are a decent example to ponder. I was going to say there could be collusion, because my perception was there were maybe 5 in my community of 1MM. It would be relatively easy for them to get together and set an unnatural floor on prices, since demand is relatively inelastic. Lo and behold, I find out there's almost 20 options. The chances of all 20 colluding is incredibly small, because they are free enterprise.
As to real estate agents, as I pointed out in the first thread, there's an entire Forum dedicated to Real Estate to explore that topic. From an economics standpoint, all consumers should do a cost-benefit analysis - can I do better financially myself, how much more time will it take me, and what's that hourly benefit. The AVERAGE for sale by owner nets ~ 5.5% less (or close to that, the survey is a year old now) than using an agent. Let's use the 6% assumed (but incorrect) average for a Realtor. Take 1/2% of your home value, and figure that difference. Note that's an average - some will do worse (more than 6% less) and some will do better (even MUCH less than 6% all the way to 0% less).
When one says real estate sales at 6% commission is price gouging, it proves that they know nothing about real estate business.
First thing is, today there is a listing agency, and a selling agency so each is represented by their own agent. This cuts the commission to 3% for each office.
Then the commission is split between the agent and the office, lets say 50% split, which means each side get 1.5% of the commission.
The office has many expensive expenses that the average person has no idea of.
The salesperson, has a lot of expenses. Gas and other car expenses to run their clients around to see homes which is a total of about 40 cents plus per mile, and this may be many miles and many hours per sale. Advertising, Realtor Membership dues, putting listings on the multiple listing service, and after a sale, they spend hours getting credit approved, and other factors to get the sale to close. It takes more time after the sale to get it to closing by far, than the average time to make the sale. NAR (National Association Of Realtors) figures show that the average successful Realtor, sells 12 homes per year. On the other hand the vast majority of people that go into real estate sales, fail out of the business as they go broke trying to do real estate sales. In fact NAR says that 80% of all sold real estate, is sold by only 20% of the agents, and only 20% of real estate is sold by 80% of licensed agents.
A few agents make a decent living compared to other professionals, and the rest are often living in poverty trying to make a living. Today over half of all agents are wives of successful men, doing real estate part time and most are not making a lot of money doing it.
And the best agents, may charge as much as 10% for harder to sell property that would cost them money out of their pocket to sell it at 6% commission due to extra expenses and time involved.
I spent from 1972 until I retired as an investment real estate broker, handling the accounts of investor clients from Oil Fields of the Far East to Malaysia as well as local clients. Buying, selling, and exchanging real estate for the same people over and over. I had 18 years sales experience, and spent one year taking university and private classes to learn the business before entering the business. Without this background, I would not have had my success. I sold a small luxury apartment house to a former co-worker the first day in the business, and the one next door the 3rd day in the business. The following week, I went to my first state wide marketing meeting for exchangers and exchanged a better quality newer apartment house, as the down payment on a large irrigated farm. Water rights on the farm were $2,200 per acre, so it was an expensive farm. In those 2 weeks I sold over $1,000,000 in real estate to enter the Million Dollar Club for one year of sales, which back then very few agents qualified, and was off and running a successful business. I and my wife had both taken university classes that qualified us to be brokers, without 2 years minimum experience, and we had our own office. No employees, except my daughter worked for us during summer vacations from college. If I hired agents, I would have been managing them instead of being able to make the sales I made. I handled the clients, and my wife did the other work normally done by the seller from getting the financing, to handling the closings. It gave me a lot more time to list and sell more real estate. She was a broker, a GRI, a university trained para legal real estate specialist (only one working in a real estate office), one of the founders of the County Wide Closers Association, and the trainer for the closers in the county.
NAR says the average successful salesperson sells 12 homes a year. I did not sell homes for personal residences, but bought and sold a lot as rental investments. The best day I sold 14, all sold to investors. 1 was a home to be repossessed by the VA the next work day, I listed first thing one morning, and the other 13 that were in a to be built subdivision one of the longest time Brokers in town owning a 13 lot infill subdivision, and a small builder wanted to build. They needed half under contract to get construction money. They made me a price I could sell them to investors. I sold all 14 with every call selling 2 to 5 homes, depending on how much available down payment money the investor had available. Every call was a sale, and all contracts were signed both sides by 5pm.
I developed some land, and built some homes, duplexes and commercial to sell to my clients.
I was not the average Realtor, but knew a lot of them personally. I know they were not getting rich at 6% commission, but the good ones were making a decent living and that is all. A few in the city, mostly handling farms and ranches, etc., were making very good livings as were other professionals in the city. The majority were just barely making a living, or failing out of the business.
It just makes me angry to see people posting that 6% commission is price gouging, knowing the costs of being in the business, and how little the average agent earns a year. Most people except minimum wage workers, would not work for the income that the typical licensed agent earns after expenses per year.
Actually, it has never existed. It cannot be defined. If you can't define it, it doesn't exist.
Most states have price gouging laws. Often along these lines.......during a declared state of emergency price increases of more than X% (often 10-25%) are in violation.
Real estate agents - Though thankfully this is changing with tech, I see tons of Redfin listings and now starting to see a fair amount of Rex listings which is great. Paying an agent $50k to sell a home that will sell in one week with 20 contracts? Yeah I'll take a hard pass on that, maybe if you're in a slow market and actually need marketing done is where I can see 5%-6% being fair. Home prices tend to be lower in those markets too which makes the fee more reasonable.
Along these lines, one thing I am very tired of is "poor service" being blamed on Covid. Like OK, I know my customer service sucks but now I can blame it on something other than me paying pi$$ poor and no one wants the job.
Long term price gouging for services occurs with some companies,even when there is not an emergency.
The way that the company accomplishes this is by heavily advertising on TV and by enticing mailers generally with a coupon.
Frequently old people are the victims,or if an emergency people choose not to get additional estimates.
Supply and demand does not come into play when there is not a central market to display prices such as Ebay,Amazon or even Google listings.
Many people when something is broken and the tradesman is at their home and can fix it now do not choose to price shop.
Generally companies that have a history of charging prices that are beyond expensive have a numerous complaints and settlements with consumer affairs.
When a consumer makes an uneducated decision this is price gouging per your interpretation?
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