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Some South Padre Island Brokers Hesitant to Adapt
855 Views :: 7 Comments :: :: South Padre Island, Economy
A few local brokers in the South Padre Island area are resisting discounted service options in apparent violation of NAR policies.

Interest in the South Padre Island area is at an all time high and AliceDonahue.com, the leading real estate web site, is reporting record levels of traffic and "the phone is ringing off the hook." - says Alice Donahue, Broker

"Our volume of business and automation allows us to offer services and un-cover information that helps our customers save money. We also help match buyers and sellers more easily by having large numbers of both available, so that our staff and automated tools can help bring them together."

And it has not all been a bed of roses,

"We recently added a service that provides low cost - similar service - flat fee seller listings, that our automated tools have made possible. This service is appealing to a small group of our customers who are local and prefer to show their property themselves, to save some money or to offer their property at a lower price."

"Even so, most of our customers continue to use our full service offerings. In fact, the only people who don't like our new service are a few Realtors in the area who are afraid that we are going to cause a trend that takes away some of their commissions." "We even had an agent from another firm call a customer using the flat fee service - and said, she was going to avoid showing the listing to her clients."

The problem with that kind of call is that today's buyers know what's available, thanks to the wide spread distribution of the property listings throughout the Internet, and it's against the policy of the National Association of Realtors.

We should note that the majority of brokers and agents in the area have no problem at all with the limited service options and that these limited service options do not effect the commissions received by the buyer's broker.

Alice Donahue Real Estate continues to emphasize the value of full service listing options and recommends that only do-it-yourself(ers) try the limited service options. Of course you can always try the limited service options first and later switch to full service at anytime.

Here is the official statement from the National Association of Realtors about the matter:

According to the NAR Member Policy Department, it's the long-standing policy of NAR that boards and associations may not establish any rule or practice regulating or attempting to regulate the fees or commissions charged by REALTORS® for professional services. With respect to listings accepted by board-owned multiple listing services, the MLS must accept any valid exclusive right to sell or exclusive agency listing submitted by a participant. The fee or commission charged by the listing broker to the seller has no bearing on whether a listing will be published in the MLS.


A sample poll taken from the Internet shows consumers think that the coming changes in brokerage service options will result in better information access at lower costs.
To read more about flat fee listing services and how that can save you money goto: http://www.texasgulfcoastonline.com/FlatFeeMLS.aspx

Read "COMPETITION IN THE REAL ESTATE BROKERAGE INDUSTRY"
A Report by the Federal Trade Commission and U.S. Department of Justice

See http://en.wikipedia.org/wiki/Flat_fee_MLS for definition of Flat Fee MLS Listings
Flat fee MLS (sometimes referred to as "flat rate mls" or "fixed fee mls") refers to the practice in the real estate industry of placing pertinent information about a property for sale into the database of the local Multiple Listing Service (MLS) for a set fee or dollar amount as opposed to a commission based on the sales price of the property.

Read New York Times article on the Last Stand of the 6 Percenters
Read DOJ Competition Policy and the Real Estate Industry

We would like to get our reader opinions on this subject. Should we continue to offer a flat fee service option? What benefits or harm could offering such an option be for the real estate industry?
Rating
Comments
By Progressive @ Thursday, July 19, 2007 4:14 PM
The Federal Trade Commission and the Department of Justice antitrust division have led efforts to counter practices that they consider against consumers' interests.

According to the FTC, these practices clearly violate the ethics of the real estate profession and its fiduciary duty to clients.
By mikead @ Thursday, July 19, 2007 7:10 PM
In September 2005, The Department of Justice's Antitrust Division filed a lawsuit against the National Association of Realtors (NAR), challenging a policy that obstructs real estate brokers who use innovative Internet-based tools to offer better services and lower costs to consumers.

The Department said that NAR's policy prevents consumers from receiving the full benefits of competition and threatens to lock in outmoded business models and discourage discounting.

"The purchase of a home is one of the most significant financial decisions a family can make, and NAR's policy stifles competition to advantage some of its members at the expense of home buyers and sellers across the country," said J. Bruce McDonald, Deputy Assistant Attorney General in the Department's Antitrust Division.

"Consumers benefit when real estate brokers are free to compete vigorously by offering innovative services."

Since that time NAR has made ever effort to ensure that it's membership does not obstruct Internet-based Real Estate Brokers from Offering Better Services and Lower Costs to Consumers and has made the following policy statement:

NAR boards and associations may not establish any rule or practice regulating or attempting to regulate the fees or commissions charged by REALTORS® for professional services.

With respect to listings accepted by board-owned multiple listing services, the MLS must accept any valid exclusive right to sell or exclusive agency listing submitted by a participant.

The fee or commission charged by the listing broker to the seller has no bearing on whether a listing will be published in the MLS.
By Michael Parker @ Thursday, July 19, 2007 7:27 PM
Online Marketing: DOJ vs NAR®

With all the uncertainties facing the real estate industry today, none has more far-reaching possible implications than the ongoing legal battle between the Department of Justice and the National Association of Realtors®.

Nothing less than the entire business model of NAR® is at issue, with the government challenging the commission structure, the MLS process, the ownership of your listings, even who may access your listings.

Anyone who thinks these issues will all somehow blow over and go away might be whistling past the graveyard. There is long and ample precedent for the wholesale restructuring of basic American institutions under pressure from the "trust-busters" all the way back to the Standard Oil Trust.

AT&T (formerly the ONLY American full-service phone company) was taken down. IBM fought off the DOJ for decades, spending hundreds of millions of dollars (if not billions) in the process and stalemated the DOJ. Microsoft has battled for years. When government gets the bit in its teeth, you can bet that things will change. They are unstoppable by conventional means, have unlimited funds to spend litigating, have unlimited time to litigate, and can take the long view. Opponents of the government rarely can say the same.
By Albert Hepp BuySelf Realty @ Friday, July 20, 2007 1:43 PM
Most real-estate agents are ethical, but some full-service brokers step out of line, putting their interests ahead of consumers: "The best analogy I can use is a high-school classroom when the teacher walks out of the room."
By Internet Home Services @ Friday, July 20, 2007 1:45 PM
For decades, the real estate world turned in a predictable manner. The roles of buyers, sellers and real estate professionals were fairly well defined and transactions followed a predictable path of yard signs, newspaper ads, open houses and miles of paperwork.

Recently, online and empowered consumers have changed the game. Real estate professionals now face issues similar to the ones that have transformed the retail, personal finance and travel planning industries.

As technology advances and new business models evolve, the real estate industry has begun to transform itself from providing traditional, carefully controlled agent-centric transactions to new consumer-centric practices.
By mikead @ Saturday, July 21, 2007 1:31 AM
Minimum service broker Corey Scholtka, offers this advice about limited service offerings:

Scholtka says he is performing a service to consumers by providing them with exposure to agents and their clients in the local MLS.

1. Never say anything bad about full-service: Many people need full-service and limited services are not for everyone! It may be suitable for the more experienced home seller, investors, appraisers, attorneys, and builders who all have the time and understanding to do much of the work themselves with the support of an experienced Realtor to back them up in case they need it.

2. Never list a traditional for-sale-by-owner seller. If a seller does not want to pay a customary co-broke of at least 2.0 percent (90 percent of my sellers choose my area's typical 2.4 percent or higher) then that seller will not waste my time and tarnish my reputation by appearing on my web site.

3. No FSBO signs allowed: As a former Buyers Agent, I understand how lousy it must feel to see a 'FSBO' sign in the front lawn of a listing that a cooperating agent shows to a prospective buyer... If my seller used to be FBSO then they must remove those signs ASAP. I provide my own yard signs which have my company name and Realtor MLS logos.

4. Support and stand behind the home seller: Don't stick the listing on the MLS and forget about it! If the seller is in need of additional services, do not allow them to force the cooperating agent to do the extra work, help the seller out or else require that they get an attorney (or tell the seller to pay more to those who do more work and authorize cooperating agents to ask for more for their additional efforts).
By mikead @ Thursday, October 11, 2007 7:08 AM
The U.S. Justice Department's Antitrust Division released a new Web site focusing on competition in the real estate industry that features commission trends and states that have adopted policies that can restrict consumer rebates and some forms of brokerage services.

See http://www.usdoj.gov/atr/public/real_estate

The site is intended to educate consumers and policymakers about the potential benefits that competition can bring to consumers of real estate brokerage services and the barriers that inhibit that competition.
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