Although consumer advocacy efforts by the Federal Trade Commission
and Department of Justice, in each of the above states, have proven
fruitless
(e.g., their Letter re Texas legislation earlier this year), the agencies submitted
newest battle ground - Michigan.
The FTC/DOJ Letter to Michigan legislators gives this background (at 4):
“It is becoming increasingly common for home sellers and home buyers
to want some, but not all, of the traditional brokerage services. For example,
some sellers might want help advertising their homes, but want to negotiate
the sale price themselves. Such consumers might prefer to pay a real estate
professional only for the service of listing their homes in the local MLS [multi-
ple listing service] and placing advertisements in local media. Other consumers
might find a buyer without assistance, but would like to hire a real estate pro-
fessional to assist them with the negotiation of the sales price or with the
paperwork required to close the transaction. The marketplace is evolving in
response to these consumers. Real estate professionals who are willing to
provide a customized subset or menu of a la carte services have emerged in
Michigan and throughout the country. These “fee-for-service” or “menu-driven”
business models are currently legal under Michigan law and typically enable
consumers to save thousands of dollars because the consumers pay only for
those services they want.”
The legislation proposed in Michigan (HB 4849) would require brokers acting
“pursuant to a service provision agreement creating an exclusive agency relationship” to,
at a minimum,provide (a) marketing services for the seller in the manner agreed upon in the
agreement; (b) the acceptance of delivery and presentation of offers and counteroffers; (c)
assistance in developing, communicating, negotiating, and presenting offers, counteroffers
and related documents, until agreement is reached and all contingencies satisfied; (d) assis-
tance necessary to complete the transaction under the terms specified in the purchase
agreement; and (e) furnishing and completing the legally-required closing statement.
FTC Chairman Deborah Platt Majoras noted:
“Consumers should have a choice in the level of real estate
services that best meets their needs. . . The bill likely would
take away lower-price choices and also likely increase the
prices of full-service real estate services.”
Thomas O. Barnett, Acting Assistant Attorney General in charge of the DOJ’s
Antitrust Division, added: “Consumers deserve to receive the full benefits of
competition – greater choices and better services – in order to meet their real
estate needs.” In their joint submittal, the agencies point out that there is no
evidence that options available in the current broker marketplace has caused
consumer injury.
The f/k/a gang wants to add that consumers always face some “emptypocketsS”
level of potential risk, when they purchase lower-priced products
or services, but they should be allowed those choices, subject to
a strong showing that the risk is unacceptable. That is especially
true in situations, like here, where consumers have such varied needs
and capacities (for example, many Americans are capable of drafting
their own fact sheets, and printing them at-home, and of talking price
with potential buyers). Furthermore, there is a very real risk that any
mandated package includes unneeded services sold at an articifially
high price.
As Mark Ijlal mentioned at his weblawg last week, many parts of
Michigan can expect to face housing market slumps in the near future, due to
the troubles of companies like Delphi and Ford, which will bring countless layoffs
and immeasurable uncertainties. If Michigan’s Realtors have their way, those
forced to sell their homes at the bottom of the market will have fewer ways to
save money on brokerage services. But, they can feel so good about all that
extra paternalistic protection, courtesy of their smiling Realtors.
Hurricane Wilma, go away.
I know the realtor trade groups have lawyers working to get these laws 