NewswireToday - /newswire/ - Elizabethtown, KY, United States, 07/28/2006 - A report by the Consumer Federation Of America labels the Kentucky Real Estate Commission (KREC) as "amongst the most aggresive at promoting the interests of the real estate industry over that of consumers".

At issue is the dominance of the state real estate regulatory body by active brokers and lawyers and their close ties to the industry that they are chartered to oversee.

There seems to be at least three major areas of contention that caused consumer groups, the Department of Justice, Antitrust Division, and the Federal Trade Commission to focus attention on state real estate regulatory bodies. They are:

• Minimum Service Laws and Rules imposed by the regulatory body on brokers that virtually eliminates the possibility of purchasing real estate services on an a la carte basis that has the potential to save sellers thousands of dollars on the sale of their house.

• Promotion by the real estate regulatory body of a convoluted form of representation called ""duel agency and designated agency"" that makes it legal to represent two opposing parties to the same transaction.

• The imposition of ""anti-rebate"" laws that make it virtually impossible for brokers to compete with each other for business based on the price of their service.

The Kentucky Real Estate Commission suffered a set-back in the 2006 state legislature when it's proposed minimum service law was struck down under pressure from antitrust official, flat fee brokers and consumer groups. The commission then circumvented the lawmakers and exercised its power to create a minimum service ""rule"" that has the same effect as the originally proposed law but did not require legislative approval. Kentucky's current minimum service rule has reportedly been a factor in the demise of some Kentucky limited service brokerage operations.

""Duel Agency and designated agency"" are promoted by the Kentucky Real Estate Commission and serve the industry well to the detriment of consumers, according to some observers. These convoluted deviations from common agency law make it possible for brokers to shield the fact that they actually represent neither party in the transaction while collecting a larger commission and remaining in compliance with Kentucky real estate license law.

Up until 2005, The Kentucky Real Estate Commission enforced an ""anti-rebate"" law that made it impossible for brokers to compete for customers based on the price of their service. Served with a federal lawsuit objecting to this provision as an antitrust violation and charging the commissioners with conspiracy, the Feds and the Kentucky Real Estate Commission reached a settlement agreement that forced the Commission to stop enforcing the rebate law.

The Kentucky Real estate commission was also criticized recently for running radio commercials (krec.ky.gov) that posed as ""public service announcements"" claiming that Kentucky licensees are ""trained real estate negotiators"" and by not working with one of them a seller could expect to lose up to 3% on their home sale. Pre-licensing training for sales agents and brokers in Kentucky actually offers no training in real estate negotiating.

Currently the Kentucky Real Estate Commission operates independent of oversight by any branch of state government. The panel is made up of active real estate brokers and a lawyer. They generate their own taxes (fees from licensee) and spend it in any way they see fit. Expenses like $20,000 for radio commercials require the approval of no superior agency or person. Some are calling on the state legislature to review this arrangement and an effort is under way to legislate a reorganization of the Kentucky Real Estate Commission to make it more responsive.

These and other industry friendly real estate laws/rules either created or proposed by the Kentucky Real Estate Commission (KREC) make them seem more like an industry tool than a consumer protection arm of state government in the view of many consumers.

Many of the rules, policies and laws on the books of real estate regulatory bodies nationwide are adverse to consumers and are forcing them to pay too much for real estate services according to reports. Real estate commission cover for the industry is not unique to Kentucky. The majority of real estate regulatory bodies nationwide need closer scrutiny to detect the abuse of power when and were it exist.

Agency / Source: TW Shortt & Assoc., Fl. Real Estate School

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