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The National Association of REALTORS continues to feel the effects of the 60 Minutes piece that aired recently. Leslie Stahl, 60 Minutes reporter and host of the segment titled Chipping Away at REALTORS Six Percent Commission, set out to expose the cartel that exist in the US real estate industry.
REALTORS have come under intense criticism in the last few years for use of its power to keep the price of real estate services high by blocking lower costs business models.
With a nest egg of over four hundred million dollars and millions more rolling in annually from it’s over a million members and its Realtor.com revenue, the National Association of Realtors is not shy about doing what it takes to maintain the status quo in the industry. This means keeping real estate broker’s commissions high by helping to create and maintain barriers to business models that could save consumers thousands of dollars on individual home sales and purchases.
While the National Association of Realtors’ (NAR) public policy is to embrace all business models, it works behind the scenes to help state affiliated REALTOR association influence state regulators and legislators pass tough new laws to stop the spread of the lower costs brokerage models.
In Tennessee the State Legislature recently passed a law promoted by REALTORs that makes it impossible for brokers to compete for business based on price. This so called “anti rebate” laws makes it an offense for a buyer’s real estate broker to rebate part of his commission to his customer.
Many states have taken steps to limit the proliferation of these lower costs business models by enacting laws and rules that force consumers to purchase more services than they actually want and need.
In Kentucky for example, REALTORs promoted legislation in 2006 that would have made it an act of gross negligence on the part of brokers if they tried to offer limited service to customers. Fortunately, The US Department of Justice intervened and was able to block the bill by showing how it would actually harm consumers.
Besides its grip on state real estate regulators, the National Association of REALTORS’ also controls nearly all Multiple Listing Services (MLS) in the country. Some are currently facing federal charges for antitrust violations by the US Department of Justice.
The MLS, a place for REALTORS to share information about available properties and commissions, is usually operated in secret to avoid the spotlight currently plaguing the National Association of REALTORS.
In Kentucky, the MLS cited a minor violation when it recently kicked out a member. Jason Deppen, a broker with REMAX, who operates a web based discount listing service, found himself on the wrong side of the MLS secret society and was summarily suspended for three years with no formal hearing or record of the proceedings. In the history of the Heart Of Kentucky Association of REALTORS MLS, this was the most severe punishment ever imposed on an active productive member.
A recent joint report by the US Justice Department and the Federal Trade Commission encourages state real estate regulatory bodies to become more vigilant at insuring competitive forces are allowed to function in the industry to drive prices down and expand options available to consumers. Since most state real estate regulators are actually REALTORS, the likelihood of this happening is remote.
With outdated state laws on the books and the awesome political power in the hands of the NAR, consumers are not likely to see a major change any time soon.
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