Competition in the Real Estate Brokerage Industry - #16
Friday June 15, 2007
Legislative and Regulatory Restrictions on CompetitionAnti-Rebate Laws and Regulations
It's quite clear from this section of the report that the Department of Justice seriously dislikes anti-rebate laws in real estate. It's also clear that they're serious about taking action against states that put this type of legislation in place. Even major real estate franchise representatives on the panel agreed that these laws are not productive and a barrier to effective competition in the business. At the time the report was published, it stated that Tennessee was in the process of rescinding theirs, but recently the Governor of Tennessee made it law with his signature.Minimum Service Requirements
Though states that enact these laws will say that they're to protect the consumer, the DOJ sees it quite differently. By limiting consumer choices, such as for an MLS Only listing, the government says that consumers are harmed. Of course the real estate industry feels that this protects consumers from being thrown on the MLS and then left on their own without the knowledge to protect themselves in a transaction.
It's quite clear from this section of the report that the Department of Justice seriously dislikes anti-rebate laws in real estate. It's also clear that they're serious about taking action against states that put this type of legislation in place. Even major real estate franchise representatives on the panel agreed that these laws are not productive and a barrier to effective competition in the business. At the time the report was published, it stated that Tennessee was in the process of rescinding theirs, but recently the Governor of Tennessee made it law with his signature.
Though states that enact these laws will say that they're to protect the consumer, the DOJ sees it quite differently. By limiting consumer choices, such as for an MLS Only listing, the government says that consumers are harmed. Of course the real estate industry feels that this protects consumers from being thrown on the MLS and then left on their own without the knowledge to protect themselves in a transaction.
The second problem with these laws, according to the DOJ, is that they limit competition against full service brokers. Well, that's probably a given. If you mandate "full service", then no competitor can undercut your price significantly while being forced to provide the same services. States who consider these laws, such as New Mexico recently, are being threatened with action by the DOJ. New Mexico backed down and didn't implement the proposed rules.
Entire series: #1, #2, #3, #4, #5, #6, #7, #8, #9, #10, #11, #12, #13, #14, #15, #16, #17, #18, #19 & final
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