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U.S. may sue Realtors on commissions
CNN ^ | May 9, 2005: 6:38 AM EDT | CNN

Posted on 05/09/2005 4:59:07 AM PDT by Koblenz

NEW YORK (Reuters) - U.S. antitrust regulators are preparing to sue the National Association of Realtors (NAR) over policies they believe will illegally restrict commission discounting and harm online competitors, The Wall Street Journal reported Monday.

The effort by the Justice Department and the Federal Trade Commission aims to protect buyers and sellers of homes and could help contain high real-estate costs in a booming housing market, the newspaper said.

(Excerpt) Read more at money.cnn.com ...


TOPICS: Business/Economy
KEYWORDS: brokers; commissions; fairtrade; govwatch; realestate; realtors
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To: Koblenz

I frankly like the idea of a Fee for Service program. The Realtors Associations should not be allowed to keep Realtors from offering their services on an 'as needed' basis. If I only want a realtor to list my home on MLS, and I'll do everything else, I don't want to have to pay 6% or even 4% for that. I'd like to be able to negotiate a price for the services I think I'll need.


61 posted on 05/09/2005 7:23:46 AM PDT by SuziQ
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To: JimRed
I dunno, how about RTFA:

the Kentucky Real Estate Commission illegally conspired to impose and enforce the rebate ban in order to fix commissions and deprive consumers of price competition by brokers.

The Justice Department and the FTC have warned several states in recent months that such laws hamper innovation and competition, and have formally objected to industry-supported proposals in Oklahoma and Texas. (emphasis mine)

I am basing my comments on the article's description of state real estate commissions pushing legislation to fix commissions. If the article is incorrect, then my objections go away.

62 posted on 05/09/2005 7:26:17 AM PDT by kevkrom (If people are free to do as they wish, they are almost certain not to do as Utopian planners wish)
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To: kevkrom
Do the selling and buying agents each deserve a legally-mandated 3% for that

When I sold my house in Florida I negotiated 4%. Since when is 6% legally-mandated?

63 posted on 05/09/2005 7:28:00 AM PDT by killjoy (Real Men Love Bush)
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To: SuziQ
The Realtors Associations should not be allowed to keep Realtors from offering their services on an 'as needed' basis.

The associations (at least in our state) are NOT allowed to dictate how services may be offered or what may be charged.

64 posted on 05/09/2005 7:29:00 AM PDT by JimRed ("Hey, hey, Teddy K., how many girls did you drown today?")
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To: kahoutek
Don't know what state you live in, but realtors here in CT can't do much more than represent the buyer/seller as an agent.......a realtor closing a property is strictly a lawyer's purview.

I do live in CT. And I understand this but the other poster doesn't seem to or it's not the law in his state.

All commission percentages are negotiable in CT.

I know this too. When we were looking for a house or land we got the same from all realtors: "The state says we can charge 6%." They left it at that giving the impression that it was set by the state and inflexible. I know different now.

That said, I'd like to know how, as you state, all realty business is done on the internet......

What I said was: "It's all done on the internet and through networks." Meaning that all houses and properties are listed on the real estate network (I forget what it's called) and now on the internet. As an agent a buyer comes in (like we did) and they look up what we want by price, location, land type, etc. How hard is that?

My brother works for a company whose big client is Raveis Realty. He is in charge of putting the listings into the system. The RE agent doesn't even have to do that if someone comes into their office to list a property.

So, you drive around and meet someone at a house to show them. What makes you a better choice to sell my house (at 6%) then me? Do you know more about my house than I do? I bought the land and built the house through a construction loan. I know every knook and cranny of my house. If I want to sell it why do I have to pay 6% to someone just for access to system?

65 posted on 05/09/2005 7:30:54 AM PDT by raybbr
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To: old and tired
In Arizona a fsbo property will sit on the market 3 times longer than one listed on the MLS. We have no set real estate fee here, and that's as it should be. I suppose it would depend on the market area and conditions whether or not a Realtor is needed..Here instead of attorneys, Title Companies are used at a small fee + the cost of a Title Insurance Policy...

Here we have a lot of transits. Those people definitely need the services of an agency.

66 posted on 05/09/2005 7:32:03 AM PDT by hope
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To: rhombus
However, should an offer be made and accepted it is then the selling agent that has to hold the whole thing together by making sure that lawyers do their jobs and that inspectors get access to the house, the correct paperwork and insurance policies are available at closing.

Not exactly as a mortgage broker friend of mine tells it.

He claims the mortgage broker orders all inspections, acquires updated insurance policies, orders title search, runs credit check, finds lender & gets loan approval & gets all necessary paperwork in a packet for the closing officer.

According to him, all Bambi the Real Estate Agent does is take the client upstairs to show them the basement, then downstairs to show them the attic and fills in the blanks on an offer form ;-)

67 posted on 05/09/2005 7:32:37 AM PDT by varon (Allegiance to the constitution, always. Allegiance to a political party, never.)
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To: jaydubya2
No offense to realtors on the forum, but there are a lot of bad apples out there.

No offense taken, and we want the "bad apples" out of the business too! They make all of us suspect in the eyes of the public.

68 posted on 05/09/2005 7:36:37 AM PDT by JimRed ("Hey, hey, Teddy K., how many girls did you drown today?")
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To: killjoy
When I sold my house in Florida I negotiated 4%. Since when is 6% legally-mandated?

*Sigh*... read the article... in some states, real estate associations are pushing legislation to fix commissions. Just because it hasn't happened in you state (yet) doesn't mean that the problem isn't out there.

69 posted on 05/09/2005 7:39:07 AM PDT by kevkrom (If people are free to do as they wish, they are almost certain not to do as Utopian planners wish)
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To: Koblenz

Ridiculous. Realtors do a tremendous amount of work - furthermore, if you FISBO your home or go with a discount broker (who basically does nothing but list it), you're getting away with it only because the other party generally has a realtor, who ends up doing all the legal work (title search, home inspections, warranties, contracts, etc.) for you.

People can also do their own plumbing if they are so inclined; but plumbers still have licensing standards, generally standardized rates for an area, etc. Why isn't the government suing plumbers' associations?


70 posted on 05/09/2005 7:40:42 AM PDT by livius
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To: varon
According to him, all Bambi the Real Estate Agent does is take the client upstairs to show them the basement, then downstairs to show them the attic and fills in the blanks on an offer form ;-)

Ask more people than your friend. You would be wrong about who does the leg-work at least in some states. The reference to "Bambi" is just insulting.

71 posted on 05/09/2005 7:45:28 AM PDT by rhombus
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To: Koblenz
Six Percent is way too much to earn for home sale transactions. It amounts to thousands and thousands of dollars without putting a lot of effort into the transaction. In these days of the internet, it's time to let the market decide prices, not a cartel protected by state laws.

I recently represented the seller on a real estate for the sale of her home. The selling price was $590,000. The house sold in three days. The commission was $35,400, for what amounted to three hours work. My fee was $950 for the transaction, which included negotiating and drafting the contract of sale; drafting the deed; drafting various tax forms and documents; drafting the escrow agreement; dealing with the local building department regarding a problem with the certificate of occupancy; reviewing the title report and taking the necessary steps to clear title; and attending the closing of title. Guess whose fee my client complained about?

72 posted on 05/09/2005 7:47:42 AM PDT by Labyrinthos
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To: Koblenz

Commission rates should not be regulated, lower rates allow small companies (like the one I work for) to compete with the mega brokers, who have many additional operating costs (franchise fees, personnel, IT, signers etc).

As for the worth of a Realtor, many are worth the cost, many are not just like any other service. Why do people hire a financial advisor when they could do it themselves? Much work usually does go into selling a house, or expecially working with buyers (and many do take months to find a home)...not to mention many sellers and buyers are not objective enough to negotiate, cannot spare the time to show, pre-qualify, walk through the steps to closing, save a deal etc. It can be a very harrowing experience, especially since it is a huge investment and when things go wrong it can be difficult to separate emotion out of the deal.


73 posted on 05/09/2005 7:53:53 AM PDT by soloNYer
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To: JimRed
Bottom line is, most agents earn their pay by doing better for the client than theclient can do for himself.

Here's a true story for you. I owned a rental property (a row home) that was going to start needing repairs soon. With prices up, I decided to sell. Someone two doors down, living in an identical home, also decided to sell. They used a realtor. I sold myself. I sold mine a month before he did. We both had bidding wars on our properties and he ended up getting $10,000 more as a selling price than I did. Truth be told, his house was in slightly better condition, so it didn't surprise me one bit.

But by avoiding commissions, I got $11,000 more than he did at closing. Of which, I owed $800 to a real estate attorney. In this market, I really think you have to be incompetent, unpresent, crazy, or lazy not to sell your own properties yourself.

74 posted on 05/09/2005 7:54:44 AM PDT by old and tired
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To: livius
but plumbers still have licensing standards, generally standardized rates for an area, etc

Plumbers rates are standard only for union work. Otherwise a plumber (in PA, anyway) can charge whatever he pleases.

75 posted on 05/09/2005 7:58:50 AM PDT by old and tired
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To: Labyrinthos

$35,000 to sell a house? That's good for you, but your client is probably now realizing that it was not a good deal for them.


76 posted on 05/09/2005 8:02:42 AM PDT by jaydubya2
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To: old and tired

Dear old and tired,

"Also, with the internet, I can't see why the average person needs an agent to buy a home."

A problem in this area is that unless you're working with a buyer's agent, it is likely that the more desirable properties will be sold by the time they get on to the Internet.

Around here, it may take two or three days for a property that has a For Sale sign to make it to the Internet real estate listing sites. By that time, the house may already have multiple contracts.

Of course, that really doesn't argue for HIGHER commissions, LOL.


sitetest


77 posted on 05/09/2005 8:03:13 AM PDT by sitetest (If Roe is not overturned, no unborn child will ever be protected in law.)
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To: VTCowgirl

I have sold two house on my own. Put up some signs, ran ads in the Sunday paper, did open houses. When it sold, doing the paperwork was a piece of cake - the buyers bank takes care of everything. If I ever sell our current house, I will do the same thing. Real estate is the biggest silent collusion business in the country. I honestly believe that people think they HAVE to sell their house through an agent. As you said, 20 years ago houses were a lot less expensive. Having to fork over tens of thousands of dollars is ridiculous.


78 posted on 05/09/2005 8:03:53 AM PDT by DennisR (Look around - there are countless observable clues that God exists)
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To: JimRed
I've just been reading your posts. I see you are an agent. I'm sorry. I didn't mean to offend you. I would have chosen my words more carefully, if I had known I was speaking of your livelihood. I do think there is plenty of need for real estate agents. Many senior citizens or just plain old gullible folks could fall prey to investment schemes if they try to sell their own homes. Real estate agents are a safety against that. Also, marketing a home can be a difficult task in some neighborhoods. And of course, there are plenty of people who don't want to be bothered with the legwork involved in looking for a property.

I am opposed to the government mandating a fee for any service a private citizen provides.

79 posted on 05/09/2005 8:04:11 AM PDT by old and tired
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To: Maceman

I agree SOME work hard but why not a sliding scale.


80 posted on 05/09/2005 8:05:30 AM PDT by longtermmemmory (VOTE!)
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