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Justice Dept., FTC warn against
limited-service real estate rule |
Say proposed Texas rule would restrict
consumer choice
Thursday, April 21, 2005
Inman News
The Department of Justice and the Federal Trade Commission issued a
joint letter urging the Texas Real Estate Commission to reject a
proposed regulation that would change current rules by imposing new
restrictions on the ability of Texas real estate professionals to offer
flexibility in brokerage services.
The agencies expressed concern that the proposed regulation would cause
Texas consumers to pay more for real estate services, and would reduce
consumer choice by restricting the ability of real estate brokers to
provide services tailored to customer needs.
Currently, Texas real estate brokers can offer the level of service that
a customer wants and needs. If the Commission accepts the proposed
regulation, customers will be forced to purchase additional services
that they may not want or need.
"Limited-service brokers are growing rapidly in Texas and across the
country because they provide greater choice and can save consumers
thousands of dollars on a single home sale," said R. Hewitt Pate,
Assistant Attorney General in charge of the Department of Justice's
Antitrust Division. "The proposed regulation would restrict the
beneficial competition created by these limited-service brokers, and the
Texas Real Estate Commission should reject it."
In Texas, real estate services are offered by limited-service brokers
and full-service brokers who compete against one another. Full-service
brokers charge consumers a single price for a bundle of individual real
estate services, and limited-service brokers offer consumers the option
to pick and choose from a menu of different real estate services
according to each respective consumer's individual needs. For example, a
seller can decide to purchase only multi-list services from a broker and
to represent himself or herself in negotiating with buyers.
Under the proposed Texas regulation, limited-service brokers would be
required to bundle together certain of their service offerings into a
mandatory package and would no longer be able to offer services
separately. In this example, the seller would be required by the
proposed regulation to purchase representation and negotiation services
from the broker in addition to the multi-list service. As a result,
customers would have fewer choices and pay more for their real estate
needs if the regulation is passed.
"The Commission is urging the Texas Real Estate Commission to reject the
proposed rule, which would restrict the ability of limited-service real
estate brokers to respond to the demands of Texas consumers," said FTC
Chairman Deborah Platt Majoras. "The likely result would be higher
prices and fewer options for the state's consumers, with no offsetting
benefits."
The Texas Real Estate Commission is expected to vote on the proposed
regulation, entitled Broker's Responsibility, 30 Tex. Reg, 1400, on
Monday, April 25. The proposed regulation amends the Texas
Administrative Code, title 22, section 535.2. |
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