Association still has no formal stance on
minimum-service debate
Friday, May 06, 2005
By Glenn Roberts Jr.
Inman News
Two months after taking over as president of the National Association of
Realtors, Al Mansell – also a state senator in Utah – sponsored
legislation that would mandate the minimum level of services that
brokers must provide consumers under written contract.
The law, Senate Bill 56, which was introduced Jan. 26 and signed by the
state's governor March 18, took effect on Monday. The legislation is
similar to an Illinois law that passed last year, and several more
states are also considering similar legislation.
The Utah law requires brokers to at least accept offers and
counteroffers on for-sale properties when working under contract with
clients, which would prevent brokers from offering listing-only services
in this scenario.
Some other states have pursued more restrictive measures that would
eliminate some limited-service business models. Efforts in Texas and
Oklahoma have come under fire by the U.S. Justice Department's Antitrust
Division, which has charged that the proposals are anticompetitive,
opening up a nationwide debate.
Though Mansell has clearly endorsed the Utah proposal through his
sponsorship of the legislation, the National Association of Realtors has
not formally announced any position on whether it supports such
legislative efforts, and maintains that individual members are welcome
to their own opinions.
"Many of our members have different roles at different levels and have
personal opinions on different things," said Steve Cook, a spokesperson
for the national association. "(The association) has no policy on
minimum-service, per se. It doesn't mean that it may not at some point –
but at this point it doesn't," he added. Also, Cook said the national
association doesn't keep tabs on how many states have passed or are
considering legislation that relates to minimum-service requirements for
real estate brokers.
While the association has not formally endorsed minimum-service laws and
rule changes, it has offered some legal advice.
The U.S. Justice Department and Federal Trade Commission have in the
past month issued statements in opposition to a proposed rule in Texas
and a proposed law in Oklahoma, charging that those proposals are
anti-consumer and anti-competitive. The agencies have refused to
disclose whether they are planning similar actions in other states.
State Realtor associations, meanwhile, have responded aggressively to
the federal intervention, criticizing the federal government for
stepping in on state issues and charging that the Justice Department is
biased and uninformed.
The National Association of Realtors on April 22 issued a statement to
all state Realtor association executives to advise about the
jurisdiction of the federal agencies on such matters.
The memorandum, prepared by Laurie Janik, the association's general
counsel, states that "statutes enacted by a state Legislature are exempt
from scrutiny under the federal antitrust laws. Thus, the DOJ and FTC
can urge a state Legislature not to enact a specific law. However, once
the law is enacted, neither the DOJ nor the FTC can successfully
challenge that law." Also, while the DOJ and FTC "are free to ask the
Legislature not to enact legislation that specifies what duties a real
estate licensee must provide under state law, it is up to each state
Legislature to decide whether it agrees with the antitrust agencies.
"If a Legislature sees fit to enact legislation requiring licensees to
satisfy certain duties or perform specified services, that legislation
is immune from scrutiny under the federal antitrust laws," Janik also
said.
State Realtor associations have promoted such rule and law changes,
referring to them as pro-consumer measures that can protect consumers
from situations in which they are not adequately represented by a real
estate professional. Also, limited-service companies – such as those
that simply list the property in a multiple-listing service and provide
no other services – can put pressure on those agents who represent
buyers, as a home seller who receives only listing services may look to
the buyer's agent to help close the home-sale transaction, supporters
also say.
But opponents have said there aren't many complaints against those
companies that offer limited real estate services. Also, they argue that
such measures are anti-consumer and anti-competitive, as they can limit
the range of real estate business models available to consumers.
Chris Nye, broker and founder of MLS4Owners.com, a real estate
advertising company that offers flat-fee property listings in
Washington, said he has followed the minimum-service legislative and
regulatory proposals in several states, and he believes such laws can
limit consumer choice. Nye said he believes that the legislative
movement in several states is far from a coincidence. "I find it very,
very curious that it's been like a snowball effect – with one state
after another (proposing laws). There is a systematic approach to this
and it's creeping across the country."
The Utah law provides that brokers who enter into a written agreement
with prospective property buyers or sellers must "accept delivery of and
present to the client offers and counteroffers to buy, lease or exchange
the client's property;" assist clients in developing, communicating and
presenting offers, counteroffers and notices; and answer any question
the client has concerning an offer, counteroffer, notice and
contingency.
The law will help to ensure that consumers' interests are protected in
real estate transactions, said Christopher Kyler, CEO for the Utah
Association of Realtors, which supported the bill. Kyler said the
association's legislative committee reviewed the legislation, along with
a group of brokers representing various business models.
The association began to review the minimum-service legislation in
January, he said. "We invited additional brokers who were engaged in
various levels of service and various business models to make sure that
the bill would do no harm to any of their models either." Kyler said
Utah's legislation is less restrictive than legislation in other states,
as the minimum-service standards apply only to those companies who enter
into a written agreement with their clients.
Mansell's sponsorship of the legislation "certainly doesn't hurt," Kyler
said of the bill's successful passage. "It's a great asset to the state
to have that depth of understanding." He added, though, "No bill ever
passes unanimously on behalf of the sponsor alone. The Legislature
itself clearly saw the merit (of the bill)." The bill passed with a 29-0
vote in the Senate, and passed 68-7 in the House.
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