Posted on 05/24/2007 4:37:08 PM PDT by khnyny
Click to read article. Would not allow me to excerpt due to copyright.
http://www.tennessean.com/apps/pbcs.dll/article?AID=/20070518/BUSINESS01/705180389
It looks like the powerful NAR (National Association of Realtors) and the Tennessee Association of Realtors is trying to bypass Federal antitrust legislation (Sherman Act) with the passing of this bill. Along the way they are ripping off every consumer who will buy real estate in Tennessee.
Everyone should call the Governor's office and ask him to veto this corrupt piece of legislation.
Governor's Office Tennessee State Capitol Nashville, TN 37243-0001
Phone: 615.741.2001 Fax: 615.532.9711 Email: phil.bredesen@state.tn.us
Contact governor Phil Bredsen and urge him not to legalize a monopoly amongst realtors. VETO Bill 2095.
It would be interesting to hear from any antitrust attorneys on FR. Apparently, the DOJ told the Tennessee legislature not to proceed with this legislation, but the fine politicians of the state decided to ignore Federal antitrust laws, lol.
Maybe it’s just in this area, but what’s with the push in radio advertising lately (mostly by NAR) to call them “real-tours”?
LOL. I’m not sure. All I know is, if this becomes law, the good people of the state of TN will have to pay thousands ($$$) more than they need to, just to purchase a place to live for their families.
Realtors must have contributed a bundle to the legislature to get this passed.
Where are the politicians chanting the ‘it will harm the poor’ mantra. Are they too busy griping about Big Oil?
I personally view realtors to be right up there with used car salesman.
Consumers are paying exactly what they agreed to when they hired a realtor. Rebating commmisions should be illegal. Why should they give their commisions away?
LOL. You must be a real tour.
Seriously, you’re joking, right?
I hate to break it to you, but making rebates illegal should be illegal and it looks like the the FEDS agree with that analysis.
Commissions are not fixed, but negotiable. Price fixing inhibits competition and is very bad for the consumer/home buyer.
No, but my wife is. Commissions are NEGOTIABLE. They can range from anywhere from 7% down to 4.5%. If a realtor discounts or agrees to rebate their commissions then they are weak and I would not want them representing my home. They would be more inclined to get you to accept a low ball offer on your house or are “desperate” part-timers.
Know one forces them to give a rebate, so why should it be illegal? Why should they give them away? Because people have realized that a good number of realtors are idiots and don’t do anything to deserve 6% of a sale price. I personally like the flat fee model.
They are more inclined to accept a low ball offer either way. Check out the book “freakanomics” for a good explanation.
The real issue here is what choice do consumers have regarding the buying side. Rebates are the only way the buyer’s broker can negotiate and discount their commission, resulting in huge savings for their buyers. With the advent of the internet, and the huge increase in the median price of homes in recent years, using a cashback broker like Redfin, Cashback Realty.com, Zip Realty, etc., only makes sense.
There are only two industries that are exempt from antitrust law - the insurance industry and professional baseball. It seems that realtors are trying to add their industry to the gravy train.
The 6% agent is splitting 3% to the selling agent and 3% to the buying agent. All buyer’s agents will get their full 3% because it is paid for by the seller so the buyer incurs no cost. Rebates are nothing but bribes to get a client to work with a particular agent.
LOL. Gee, your wife (or you) must feel really threatened that her paycheck might shrink.
The DOJ (Department of Justice) Antitrust Division doesn’t agree with your “assessment”. You obviously don’t know (or don’t want to know) what you’re talking about.
http://www.usdoj.gov/atr/public/comments/223252.htm
Here’s an excerpt from DOJ to the TN House of Representatives:
“Amendment 1 would prohibit brokers from paying “cash rebates, cash gifts, or cash prizes” to home buyers or home sellers in real estate transactions. If Amendment 1 is enacted, this ban on rebating part of a broker’s commission would impede real estate brokers from competing on price, which in turn would cause Tennesseans to pay more in real estate broker commissions. Because Amendment 1 would limit this competition without any offsetting pro-consumer benefit, we urge you to reject it.(2)
The Tennessee Real Estate Commission (”Commission”) recently had a regulation (Ten. Admin. Reg. 1260-2-.33(2)) that similarly prohibited brokers from giving cash rebates to their clients. The Department investigated that regulation as a per se violation of the antitrust laws because it reduced price competition among brokers. In response to our investigation, the Commission last week voted to repeal its regulation.”
and
“The structure of the typical real estate contract makes brokers’ freedom to offer rebates important. As you know, the seller and seller’s broker typically agree on the rate of the commission to be paid and how the commission is allocated between the seller’s and buyer’s brokers. As a result, there is no opportunity for the buyer to negotiate with his or her broker for a lower commission rate. No matter how their agreement allocates the commission between the brokers, however, the total commission paid is the same. And that commission is substantial: at the median home price in the Nashville area of roughly $161,800(4), a 6% brokers’ commission equals approximately $9,708. It is easy to see why saving money on commissions is vital to consumers. Based on the Department of Justice’s experience with similar bans in other states, a rebate ban could well cost Tennessee consumers millions of dollars per year in additional commission fees.
Rebates are important under this typical structure because they often present the only viable way for a buyer’s broker to compete for business on the basis of price. If the buyer’s broker were simply to reduce his or her share of the joint commission, the savings would go directly to the seller’s broker, not to the home buyer or the home seller. Thus, lowering the commission does not bring the buyer’s broker more business or save his customers money. Rebates, in contrast, go directly to the buyer or the seller, and are powerful tools for competition among brokers. For example, a buyer’s broker can offer prospective home buyers $1,000 (payable from his share of the joint commission) at the time of closing. By returning money to home buyers, rebates also benefit home sellers, since buyers will then have more to spend on the home. Thus, rebates are key to broker competition, and the benefits to consumer that come from competition.”
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