Yep. You heard me. Realtors are price fixing around the country!!! And the Department of Justice is doing NOTHING about it!!!
First, let me state: There is to be no discussion of percentages!!!
Secondly, my question is: Is it price fixing when banks set commission rates in short sales - when they are not the Sellers (nor parties to the contract). Are they, in effect, price fixing in the markets in which they practice that activity? And, aren't we, as Realtors, complicit in that activity by accepting those rates?
I do realize that practice is a tortious interference with each broker's listing/buyer agreement (but who is going to sue?), but it is not also a criminal act under Anti-Trust?
Let me the lay out the logic of the argument in my mind:
•1. Each office is independently owned and sets its own commission policy - sometimes allowing that to be done at the broker associate level. This is the way IT SHOULD BE and, I suspect the Department of Justice wants it to be to comport with Anti-Trust legislation.
•2. Short-sale and foreclosure properties comprise 30% to 50% (or more) of the active listings in most markets presently.
•3. Banks - who are not parties to the short-sale transactions [though stakeholders] - demand novations and/or tortiously interfere with established commission contracts to impose alternative commission structures on the brokerage community.
•a. Bear in mind that the "Exclusive Right to Buy" or "Exclusive Right to Sell", as we call them in Colorado, are SEPARATE from the "Contract to Buy/Sell"; thus the requirement they are novated/tortiously interfered with imposes a condition outside of the "net price approval" for a home on the purchase contract.
So, if it's illegal for us to conspire to set prices, then why isn't it illegal for a non-party to the listing/buying agreement and the contract for sale to set commissions across a market, state or country? Isn't that price fixing?
Then, isn't it complicit to accept those novations from a 3rd non-party to the contract?
TO BE CLEAR: I AM ASKING THIS QUESTION AS A LEGAL MATTER. I AM NOT SUGGESTING ANY PATH OF ACTION. HOWEVER, MY QUESTION IS: IF PROACTIVE PRICE FIXING IS ILLEGAL, ISN'T REACTIVE PRICE FIXING JUST AS ILLEGAL??
Banks selling their REOs is one thing (they own them); their interference with established agreements -when not a party to the sale [though a stakeholder] - is another.
In my mind, this is no different than gas stations setting prices based on what they are told from their distributor...which has been successfully prosecuted before.
TO REITERATE: I AM ASKING THE PHILOSOPHICAL/LEGAL QUESTION, NOT ADVOCATING ANY PARTICULAR ACTION.
I am not a lawyer, but I am an MBA and Economist by academic training. It sure walks like a duck, quacks like an "anti-trust violation duck" to me.
;)
;)
Michael,
It is a very good subject! It needs discussed! Not with regards to rates, but rather as to why we do what we do.
I think there are two reasons:
1. Fannie Mae, Freddie Mac, and Genny Mae refuse to recognize payments to a Buyer's Broker by the buyer as part of the purchase price.
2. It's comfortable! This is the way it's always done! This is the way everyone does it! This is what every one charges! Brokers and their sales minions are not prepared to justify their fees, based on their services! Until we realize that the value of a good REALTOR is so much more than the sum of the individual labors we can't justify even the lowest fees with out sighting the market. As long as we think about our labors instead of our council there is no other way to establish your value.
Short sales pose their own problems. If buyers paid their own broker there would be no problem. If the NAR would refuse to accept listing wher the seller lakes the ability to sell, forcing the bank to join in any listing then the problem would cure it self.
Banks don't stop you from listing at any rate the seller is willing to pay! Banks are just not willing to release the title for any less, list for X% if that's what you agree on, but the seller will have to come up with any thing the bank refuses to give them.
I don't agree with your gas station analogy. Gas stations and their suppliers are in contract with each other, the bank isn't a party to the listing!
REO's are a different matter if every bank will only pay X% then there may well be collusion. On the other hand I suspect that their are plenty of brokers willing to take X%, so it's market driven.
Know your value and charge accordingly. Attorneys and doctors charge in accordance to their experience and specialty, REALTORS should do the same.
Good post.
Bill