Sherman Antitrust Act
Real estate licensees are subject to the federal antitrust laws, enforced under the Sherman Antitrust Act, that prohibit unfair trade practices in the United States. These laws are rooted in the idea that competition creates the largest choice of products and services for consumers, providing them the broadest range of price and quality. The most common antitrust violations that are associated with the real estate industry include price fixing, boycotting competitors and allocating customers or markets.
1. Avoid Price Fixing:
- Avoid discussing fees or rates with any other firms.
- Never tell a client that your rate or fee is “the going rate.”
- Make it clear that fees and rates are generally negotiable.
- If you do set firm rates/fees, make it clear that those are only for your own company.
2. Do not Boycot Competitors
When two or more parties agree to abstain from dealings with other parties to limit competition, they are essentially boycotting their competitors. In real estate, this may occur if a brokerage is unfairly denied access to a particular real estate professional organization or if two or more brokers agree to withhold their patronage from certain brokers.
3. Do Not Allocate Market Areas
If two or more brokers agree to divide a market area up so that each broker only covers a certain segment of that market area, the allocation of these segments is illegal because it restricts open-market competition. For example, if Brokers A, B, C and D are the four major brokers in a city, they cannot have an agreement to exclusively represent the northern, southern, eastern and western areas of the city, respectively. Allocation of markets does not pertain solely to geographic regions; it is also illegal to divide the market in terms of property values.
My thoughts on price fixing:
Basically, we may not say there is a going rate we charge - even if it's true. And really, it's not true anyway. Sometimes it feels like there is a going rate. But, there are all kinds of limited service discount brokers out there. They probably won't help you sell your home in my market, and some get paid up front. Prices are negotiable, but there seems to be a percentage ceiling that's been established as an accepted norm.
My thoughts on boycotting
I don't do it. It's not fair. Usually it can be seen as slanderous or libel. Use the golden rule.
My thoughts on allocating markets
I usually stick to my market because it's my area of expertise... but in this business, you sometimes have to be willing to work just about anywhere within reason to put food on the table - and to best serve your client. If you make sure you are always trying to serve your client the best, then you will know your geographic limits. But why would anyone in real estate ever try and split up territories with other brokerages? That seems highly counter-intuitive.
Has any agent out there ever heard of being found liable for violating the Sherman Antitrust Act?