{"id":187,"date":"2006-10-12T00:22:44","date_gmt":"2006-10-12T04:22:44","guid":{"rendered":"http:\/\/blogs.law.harvard.edu\/shlep\/2006\/10\/12\/realtors-fight-unbundling-and-pols-help"},"modified":"2006-10-12T22:32:23","modified_gmt":"2006-10-13T02:32:23","slug":"realtors-fight-unbundling-and-pols-help-them","status":"publish","type":"post","link":"https:\/\/archive.blogs.harvard.edu\/shlep\/2006\/10\/12\/realtors-fight-unbundling-and-pols-help-them\/","title":{"rendered":"realtors fight unbundling (and pols help them)"},"content":{"rendered":"
The management at shlep<\/em> was too busy preparing for liftoff, on Sept. 3, 2006, to\u00a0pay sufficient attention to\u00a0the\u00a0New York Times\u00a0<\/em>article\u00a0“The Last Stand of the 6-Percenters?<\/strong><\/font><\/a>.”\u00a0\u00a0\u00a0Nonetheless, we want to bring it to your attention, now, because it highlights the battle being waged by real estate brokers and agents\u00a0(realtors) to deprive home sellers and buyers of the benefits of unbundling, price discounting, and the information-access potential of the internet.\u00a0\u00a0 Although most sellers and buyers still hire real estate agents, neither are required to do so, and there are self-help materials available to guide the do-it-yourselfer through this process, or make it possible to do some of the tasks traditionally performed by brokers.\u00a0 Of course, you have to be able to find an agent willing to unbundle his or her services and\u00a0take on discrete tasks at a lower price.\u00a0\u00a0[See the\u00a0Nolo.com articles Do You Need a Real Estate Agent to Sell Your House?<\/font><\/a>\u00a0and\u00a0Should I Hire a Real Estate Agent or Lawyer When Buying a House?<\/font><\/a>]\u00a0<\/font><\/font>\u00a0\u00a0<\/p>\n
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That’s nice, you might say, but why is a website focused on self-help law<\/em> focusing on this topic?\u00a0 The answer is that realtors have been trying (successfully in several states already)\u00a0to get laws passed that would make significant\u00a0unbundling unlawful.\u00a0 <\/font><\/font>Here’s how I explained the\u00a0situation last year at f\/k\/a<\/em>, in the posting “Realtors and Legislators Are Selling You Out<\/strong><\/a>“:<\/font><\/font>\u00a0\u00a0\u00a0\u00a0<\/p>\n
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Realtors\u00a0like\u00a0receiving that large, uniform commission \u2014 usually 6 or 7 percent of the purchase price \u2014 every time they sell a home.\u00a0 Therefore, they dislike discount\u00a0brokers, and particularly\u00a0those who unbundle services and let home sellers pay a flat fee for each service or an option package.\u00a0Of course, if\u00a0the realtors conspired together to\u00a0exclude, punish or otherwise disadvantage cut-rate or fee-for-service brokers, they would violate\u00a0the antitrust laws.\u00a0<\/font><\/div>\n
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However,\u00a0realtor\u00a0associations\u00a0have\u00a0found a sword against discount brokers and a shield against the antitrust laws:\u00a0 They\u2019ve been\u00a0successfully lobbying state\u00a0legislators, who have\u00a0dutifully enacted so-called \u201cminimum service <\/strong><\/em>laws<\/strong><\/em>\u201d (in the name of consumer protection, of course),\u00a0which require brokers to\u00a0provide a\u00a0broad set of services,\u00a0regardless of whether\u00a0the consumer wants\u00a0or needs them.\u00a0 Because trade associations can lobby without violating the antitrust laws (under the <\/font><\/font><\/font>Noerr-Pennington<\/font><\/a> doctrine), and <\/font>they receive \u201cParker<\/em>\u201c <\/font>or <\/font><\/font>State Action immunity<\/font><\/a> from<\/font> the antitrust laws\u00a0for conduct that is required under a state law, consumers in many states have no antitrust protection against minimum-service laws, and now face fewer choices and higher fees when they sell or buy a home.<\/font><\/font><\/div>\n<\/div>\n

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\"RealtorSign\"\u00a0According to the GAO,\u00a0ten states have or are considering minimum service\u00a0requirements for brokers.\u00a0 (see A Summary<\/a> of the American Antitrust Institute Symposium Competition in the Real Estate Brokerage Industry<\/em>, by Norman W. Hawker, Sept. 21, 2006, at 18; and related\u00a0articles reprinted<\/a> by the Real Estate Law Journal<\/em>, Vol. 35, #1).\u00a0\u00a0 The Federal Trade Commission and Department of Justice have attempted to stymie this legislative\u00a0end-run around competition and consumer choice\u00a0by realtors, by filing advocacy submissions<\/a>\u00a0in Texas,\u00a0Alabama, Missouri, and Wisconsin.\u00a0 So far, though, their efforts have been fruitless<\/a>.\u00a0 The two agencies stated in their advocacy letters that “that these laws would reduce consumer choice and likely lead to higher prices for real estate brokerage. Further, in reviewing minimum-service brokerage proposals in several states, we have not encountered any evidence of consumer harm from limited service brokers (for example fraud or misfeasance) that would justify these minimum-service laws.”<\/font><\/font><\/div>\n
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The FTC\u00a0did get\u00a0a consent agreement from the\u00a0Austin [TX] Board of Realtors<\/a> in July, 2006,\u00a0after bringing charges that they were illegally restraining competition from discount brokers, by effectively preventing consumers with real estate listing agreements for potentially lower-cost unbundled brokerage services from marketing their listings on important public Web sites.\u00a0\u00a0Unfortunately, such restrictions would be perfectly legal if the realtors got them adopted by the Texas legislature, which gladly passed<\/a> a minimum services law last year for their friendly realtors.\u00a0<\/font><\/font><\/div>\n
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Sellers of homes should not have to go the complete FSBO route (For Sale By Owner) in order to escape the high uniform commission fees regularly charged by realtors.\u00a0For example, the seller who wants to show the home and advertise it herself should be able to find real estate agents who can lawfully perform other more complicated tasks.\u00a0 Also, buyers shouldn’t be deprived of using less-expensive internet-based agents (who often rebate a large portion of the fees they get for the sale).\u00a0 For there to be a “middle ground,” however, citizens must be vigilant against the passage of minimum brokerage services laws.\u00a0 [Read the entire NYT<\/em> article<\/a> for more colorful details, and also the response of a weblogging realtor at 360Digest<\/em><\/a>, who was quoted in the piece saying the discounters may be “trying to manufacture controversy.”]<\/font><\/div>\n
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Legislative\u00a0<\/strong>\u00a0\"HouseForSale\"\u00a0 ?<\/strong><\/em><\/font><\/div>\n

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update<\/em><\/strong> (Oct. 12, 2006): According to Mark Nadel’s AEI-Brookings Article<\/a> on real estate broker commissions, discussed at length in our update post<\/a>, there are seventeen states with minimum services laws that restrict unbundling: Alabama, Delaware, Florida, Georgia, Illinois, Indiana, Iowa, Missouri, Ohio, Oklahoma, Pennylvania, Tennessee, Texas, Utah, Virginia, Washington, Wisconsin.\u00a0\u00a0 [thanks to David Fischer at Antitrust Review<\/a> weblog for pointing to this post]<\/p>\n

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The management at shlep was too busy preparing for liftoff, on Sept. 3, 2006, to\u00a0pay sufficient attention to\u00a0the\u00a0New York Times\u00a0article\u00a0“The Last Stand of the 6-Percenters?.”\u00a0\u00a0\u00a0Nonetheless, we want to bring it to your attention, now, because it highlights the battle being waged by real estate brokers and agents\u00a0(realtors) to deprive home sellers and buyers of the […]<\/p>\n","protected":false},"author":437,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[991,900],"tags":[],"class_list":["post-187","post","type-post","status-publish","format-standard","hentry","category-news-items","category-viewpoint"],"jetpack_featured_media_url":"","_links":{"self":[{"href":"https:\/\/archive.blogs.harvard.edu\/shlep\/wp-json\/wp\/v2\/posts\/187","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/archive.blogs.harvard.edu\/shlep\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/archive.blogs.harvard.edu\/shlep\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/archive.blogs.harvard.edu\/shlep\/wp-json\/wp\/v2\/users\/437"}],"replies":[{"embeddable":true,"href":"https:\/\/archive.blogs.harvard.edu\/shlep\/wp-json\/wp\/v2\/comments?post=187"}],"version-history":[{"count":0,"href":"https:\/\/archive.blogs.harvard.edu\/shlep\/wp-json\/wp\/v2\/posts\/187\/revisions"}],"wp:attachment":[{"href":"https:\/\/archive.blogs.harvard.edu\/shlep\/wp-json\/wp\/v2\/media?parent=187"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/archive.blogs.harvard.edu\/shlep\/wp-json\/wp\/v2\/categories?post=187"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/archive.blogs.harvard.edu\/shlep\/wp-json\/wp\/v2\/tags?post=187"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}