You Said WHAT?
Real estate is and always has been a very competitive business. The multitude of firms that are active in the business in most markets, the entrepreneurial spirit that is a trademark of the sales people who make up the bulk of the industry, and the relative easy entry into the real estate business combine to insure competition. Over the years the real estate business has benefited from that aspect by seeing the different possible business models employed by competitors. Successful innovations take root and spread among the industry. Less successful ones fall by the wayside.
Our industry finds itself in another period where new business models are being introduced. That increases challenges and competition, just as new models have in the past. The law and our Code of Ethics serve to assure that consumers have the complete and accurate information they need to make their marketplace decisions. In the end, consumers decide which business methods will prevail and survive and which will fail. That, of course, is the heart of the REALTOR® association’s antitrust compliance program.
One of the bedrock principles of antitrust compliance is that neither associations nor their members collectively set the price of services provided by real estate professionals. That is a decision that is made independently by each firm.
The firm’s sales associates must take care to present pricing policies to prospective clients in a manner that is consistent with the fact that the fees or prices are independently established.
This means they should never respond to a question about fees by suggesting that all competitors in the market follow the same pricing practices or to a policy of the local board or association of REALTORS that supposedly prohibits or discourages price competition.
Focus on positive aspects of doing business with you and the services which distinguish your firm :
Additionally, the obligations of a member of the REALTOR® association impose a higher standard with regard to the statements made about competitors. Article 15 of the REALTOR® Code of Ethics states,
REALTORS® shall not knowingly or recklessly make false or misleading
The National Association’s Professional Standards Committee has said the Article logically flows from the REALTOR’s duty established in Article 12 “ to present a true picture in … representations.” This includes comparisons with competitors, and comments or opinions offered about other real estates professionals. While the Article is not intended to limit or inhibit the free flow of the commercial and comparative information that is often of value to potential users of the many and varied services that REALTORS provide, it does require a good faith effort to ensure that statements and representation are truthful and accurate.
The path to managing this risk is really consistent with the philosophy of the REALTOR organization. By focusing on the positive and presenting it honestly, the potential risks posed by the antitrust laws will be minimized and you will not only have avoided that legal and ethical liability, but you will probably elevate yourself and your firm in the eyes of the most important audience, the people who are going to be selecting you to represent them in the sale or purchase of their home.
Four Common Anti-Trust Real Estate Violations
All four are illegal under the “Per Se” rule and no defense of ignorance or lack of illegal intent will be accepted. The presumes that they are violations and condemns them automatically.
- Price Fixing – an agreement, combination, or conspiracy involving at least two persons who are nominal competitors to fix, set or rig prices (or commissions or fees). There is no such thing as an innocent discussion of commissions.
- Group Boycott (must prove) Individual refusals to deal are illegal. Violation of the law even if two or more businesses just agree to a boycott… or some coercion of a third competitor. Even a group boycott of someone perceived to be “unethical” is a problem… violation of the REALTOR Code of Ethics should be filed as a grievance… not discussed among competitors.
- Dividing the Market – Allocation of customers among two or more competitors, whether the division is based on geography, product lines, astrological sign or other criterion.
- Tying Arranging – Dominance in the market forcing consumers into purchasing a “tied” product in order to obtain the “tying” product.
Elements to Anti-Trust Violations
- Combination or Conspiracy – Existence a specific intent to monopolize or an overt action
- Restraint of Trade – Limits ability to do business
- Which is Unreasonable – Causing damage to injured party