What is market allocation in the context of real estate?

Market allocation refers to the practice where real estate brokers or firms divide specific geographic areas or types of properties among themselves in order to avoid competition. This can be an informal agreement where different brokers agree to operate within defined boundaries, which prevents them from competing against each other for business in those areas.

By assigning particular territories, brokers can ensure a certain level of sales without competing aggressively in overlapping markets. This method can reduce competition and maintain higher commission rates, but it is also considered an anti-competitive practice and is illegal in many jurisdictions as it limits consumer choices and violates antitrust laws.

The other options do not accurately describe market allocation. Establishing commission rates pertains to pricing strategies, reducing housing prices might involve various economic factors beyond market division, and increasing market share usually involves competitive marketing strategies rather than the restriction of market zones.