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When a Post Goes Arwy

By
Real Estate Agent with Integrity Real Estate Group

I'm always curious about people's reactions to various posts on AR.  I learned today how quickly one of my own posts stirred up a controversy that missed most of the  point of the post.  In the spirit of good relations on AR I deleted the Featured Post so that I would not create any additional issues.  See it isn't all about the points.

Apparently, because I mentioned the word commission in the same sentence with a number it was construed that I might be in violating the anti-trust laws.  So out of curiosity I did a quick search on the word commission on AR blogs.  If what I wrote was construed as an issue then those of you who read this who have commission rates plastered all over your profiles  (with an "standard" rate mentioned) might want to rethink your profile and make some changes.

I imagine if the post had not gotten a featured flag it would have gone unnoticed.  I do appreciate the lessons learned from AR and look forward to continuing to reap the benefits of the experience of participating in this great community.  I still would like to leave the last paragraph of my post alive for others to read:

"We need to stop the bashing of other business models and focus on what we can do to help get the real estate market back on track.  There are a lot of homeowners who need our help right now and our legacy as agents should be doing everything we can to make sure we have done our part instead of worrying about what the other guy is charging."

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                                   Real People*Real Lives*Real Estate

If you are interested in learning more about the Northern Virginia Real Estate market including Alexandria, Arlington, Fairfax and Prince William Counties give Cindy Jones and Integrity Real Estate Group a call at 703-346-2213.

Military Relocation Specialist serving military families relocating to and from the Pentagon, Fort Belvoir, Quantico MCB and all of the Military District of Washington installations. 

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Check out www.varealestatetalk.com and www.cjrealtygroup.com for more information.

Integrity Real Estate Group
 
Real People*Real Life*Real Estate

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Comments (4)

Eric Lowery
RE/BOOST, Lawrenceville, GA Real Estate - Lawrenceville, GA

Anti-trust law does not say that a brokerage can't set it's own fees. The consumer has the right to try and negotiate them, but that doesn't mean that the broker can't fix HIS OWN rates.  I can say all day long that I only list at 6% or I only list at 97% or I only list for $333.00 up front, $1500 at closing, and you pay a coop (which is actually what I do).  Anti-trust is an issue when it's expressed that brokers are AGREEING to fix prices.  BUT, if every broker says, I won't work for less than 6%, but they didn't agree to do it together, it's NOT anti-trust.  (Edited note for clarification:  I do not think that agents should an anyway conspire to set rates.  I think all brokerages, and individual agents should operate according to their own business needs.  Sure I'm not attorney, and anythign I say should be researched for oneself.  Consider this a discussion of business models and their affect on business profitability.)

In my research of business models, 5-6% seems to keep the traditional brokerage alive and operating, but other models, like our EquityShack.com or some of the other flat fee companies in my area, can operate smoothly at a different price point.  It's not that agents just want 6%, it's that many businesses require it to stay alive (or line a broker's pockets).

I agree.  Quit worrying about what other people charge.  There is enough business that the flat fee companies won't take over the market of the 7% guys anytime soon, so get away from the commission complaint water cooler and go talk to people...make sales!

-Eric C. Lowery, EquityShack.com, The Good Broker, LLC., Lawrenceville, GA

 

 

Sep 10, 2007 08:48 AM
Lenn Harley
Lenn Harley, Homefinders.com, MD & VA Homes and Real Estate - Leesburg, VA
Real Estate Broker - Virginia & Maryland

Cindy.

I thought your post was very good and worthy of a Gold Star.  It was only the opening sentence that stated something about "standard" along with a percentage that could have been problematic.  And, keep in mind that is only my opinion. 

The instructions I have gotten are clear that you don't have to "conspire" to violate the law.  You merely have to have discussions about.  The point of my post is that ActiveRAin IS, BY THE VERY NATURE of agent to agent "discussion". 

Eric's post above gives me the quivers. 

Sep 10, 2007 09:18 AM
Eric Lowery
RE/BOOST, Lawrenceville, GA Real Estate - Lawrenceville, GA

Here is a direct quote from our real estate license textbook that we use in GA, "The amount of a broker's commission is negotiable in every case. Attempting, however subtly, to impose uniform commission rates is a clear violation of antitrust laws. A broker may, however, set the minimum rate acceptable for that broker's firm."

To clarify my earlier comment and to alleviate the nerves of others, our minimum fee for our team is as listed in the comment above for the listing side and we openly negotiate our fees through the co-op portion.   Clear details and disclosures are on our website. EquityShack.com is not a brokerage but a team that operates within a brokerage whose agents negotiate commissions individually.

I am a big proponent of open market competition.  It's GOOD to have discount companies, "flat-fee" companies, traditional companies, etc. competing.  However, as a business, a brokerage will need X dollars to stay in business, and X+Y dollars to profit.  For many brokerage, using a stastical bell curve of the population, home prices and cost of living, 5-6% seems to be a threshold for existence.  Pricing structure should be (and remain) about the business model of the brokerage. As it works out many brokerages use the same business model... and as a commissioned based business, generate profit at about the same point for any given geographical area (due to similar cost of doing business).  That's why it's so important for there to be a varied degree of business models within the industry.

I believe the biggest misfortune is that agents are independent contractors and therefore become "mini-businesses" that operate just like their parent company which further compounds the impression that there is a "going rate" when in fact one does not actually exist.  If you have THOUSANDS of businesses (using the same business model) operating in one area where the COST of doing business is the same, those thousands of business will profit at about the same price point, and all those thousands of business will pretty much charge about the same rate.  That's why anti-trust is such a big deal in our industry.  It's very easy for it to appear that all agents have the same fee not because they conspire but because they all operate identically.

You charge what you charge, I'll charge what I charge. That's how it should be.

 

Sep 10, 2007 10:14 AM
Eric Kodner
Wayzata Lakes Realty: Eric Kodner Sells Twin Cities Homes - Minnetonka, MN
Wayzata Lakes Realty: Twin Cities, Madeline Island

Cindy, I think it's possible to make your point about alternative business models by simply using that last paragraph. 

I don't think your post was singled out because it was featured.  The comments about legal liabilities were based on genuine concern, not on jealousy.  Agents and brokers are taught over and over again in license classes and in continuing education classes to avoid saying, doing or writing anything which will violate the law.  In the spirit of that concern, I think an agent who wants to protect Active Rain and the community will make a comment on a blog post that is meant to give good advice.  It isn't necessarily done to pick on the author or cause a flap.

I agree with you that members here on AR who like to discuss or post commission rates should speak with a real estate attorney before they continue to do so. 

Sep 10, 2007 05:45 PM