WASHINGTON, D.C. — A U.S. Justice Department official, speaking during a public workshop Tuesday, used an analogy from the fast-food industry to simplify the federal government’s view of competitive issues in the nation’s real estate markets:

“(If) when I buy a hamburger, I’m told that I also have to buy French fries…I may not want French fries,” said Thomas O. Barnett, acting assistant attorney general for antitrust at the Justice Department.

“From that perspective, being able to choose from a menu of services — being able to choose what we want to buy — we generally view as a positive thing,” he said.

Questions over competition within the real estate industry have prompted Justice Department and Federal Trade Commission officials to take action on a range of matters this year, including suing the National Association of Realtors trade group over its policies for sharing and displaying property information on the Internet and investigating state laws that effectively ban real estate rebates for consumers.

Also this year, officials from the FTC and Justice Department have opposed state measures, backed by Realtor associations, that have sought to mandate minimum service requirements for real estate professionals, a move federal officials say would restrict consumer choice in real estate services.

Industry professionals, analysts and federal officials had the chance Tuesday to discuss their views on real estate competition and alleged anti-competitive behavior within the industry during a public workshop, “Competition Policy and the Real Estate Industry,” hosted by the FTC and Justice Department.

“Our purpose here today is to raise questions and to listen,” Barnett said during the workshop.

Deborah Platt Majoras, chairman for the Federal Trade Commission, said that while proponents of government-imposed restrictions often tout the potential consumer benefits of real estate-related measures, it is also important for consumers to have a voice apart from industry interests.

“What we want for consumers is choice,” Majoras said, adding that the ultimate goal is for industry participants to “identify ways to preserve competition while protecting consumers.”

The first panel session, “Overview of the Real Estate Transaction,” featured panelists Robert W. Hahn, executive director for the AEI-Brookings Joint Center, and Catherine B. Whatley, a past president of the National Association of Realtors trade group. Panelists discussed the role of the multiple listing service, a cooperative organization in which local real estate brokers and agents show properties for sale.

While MLSs allow brokers to cooperate with one another, there is also the potential to abuse that cooperation by setting rules that could be anti-competitive, according to Hahn. “The MLS is essentially a club and its members decide who gets to be in this club,” he said.

Whatley, meanwhile, said the MLS is inherently a good thing for consumers. Broker-to-broker cooperation in MLSs is not intended to limit participation, she said. “The fact that you’ve got a distinguishable database of aggregated information helps the consumers.”

Another panel featured representatives from full-service and discount real estate companies, along with a state real estate regulator, who focused on issues affecting competition among home sellers’ brokers.

Aaron Farmer, who opposed a minimum-service measure that was approved as legislation in Texas this year, said, “I think there is a lot of competition in the real estate industry, but the competition is among traditional brokers.” Farmer said he believes that industry trade groups and regulators have not acted in the best interests of consumers in approving minimum-service laws.

Such measures have been passed or are under consideration in a number of states, including Oklahoma, Alabama, Missouri and Utah, to name a few.  In most cases, the measures require real estate brokers to perform a minimum level of service for home sellers, including handling offers and counteroffers, and therefore place restrictions on bare-bones real estate brokerages that offer to list a seller’s home in the local MLS for a flat fee.

Not all real estate consumers are alike, and some consumers prefer to choose which services they should and shouldn’t receive without being forced to buy those services, said Farmer, whose brokerage company, Texas Discount Realty, offers a range of discounted real estate services.

Wayne Thorburn, an administrator for the Texas Real Estate Commission, which proposed the initial minimum-service measures in Texas, said he believes the commission was simply working to reinforce service requirements that consumers should expect to receive in agency relationships.

“It has been accepted for some time that a real estate broker, while acting as an agent for another, is a fiduciary. As a fiduciary, a real estate broker is held to provide certain duties to his client,” said Thorburn.

Thomas R. Kunz, president and CEO for Century 21 Real Estate, said the real estate process already “works and works rather well.”

He added, “I see a very dynamic and competitive industry that should be free of federal government intervention to sort itself out.” Kunz said that Century 21 and its parent company, Cendant, don’t believe that so-called minimum-service measures are necessary.

The fact that a number of new business models have launched in recent years is evidence that competition is thriving, Kunz said. “At the end of the day the consumer should determine what is in his or her best interest.”

***

Send tips or a Letter to the Editor to glenn@inman.com or call (510) 658-9252, ext. 137.

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