The Texas Real Estate Commission Monday debated a proposed rule that could have put an end to the way Sandra Haverlah and her husband chose to sell their Austin home.
Haverlah, who’s also president of the Texas Consumer Association, recently paid a low flat fee to a real estate broker in exchange for a lockbox, a for-sale yard sign and inclusion of her home in the local multiple listing service. She and her husband will handle marketing and acceptance of offers on the home. The practice, known as “discount” or “limited services” brokerage enables home sellers to choose and pay for only the specific services they want.
“For an investment of $1,000, we’ll save about $18,000,” Haverlah said.
The rule the Texas commissioners discussed would require real estate brokers in the state to provide home sellers a minimum level of service. The rule was proposed by the Texas Association of Realtors.
The commissioners voted to revise the language in the Realtor group’s proposal and to seek the state Attorney General’s opinion and clarification before it implements a rule. The revised proposal now states that a broker, when negotiating, can’t refuse to present and accept offers, answer questions or help prepare offers and counteroffers, according to Ron Walker, the Realtor association’s director of legal affairs. The association’s proposed version said a broker at a minimum must perform those three acts.
“It’s not exactly the same thing we submitted,” Walker said.
The Realtors association wasn’t dissatisfied with the commission’s decision, but Walker is still evaluating whether the changes would impact its position.
“We see this as a positive step in trying to reach a resolution on this issue,” he said.
The rule, first proposed nearly two years ago, has caught a lot of industry attention. Discount brokers argued it would restrict consumer choice over home sale services. Proponents argued that minimum levels of service should be required because otherwise buy-side brokers might violate state law by delivering offers directly to sellers who signed limited service contracts.
The commission also voted Monday to create a disclosure form for home sellers in limited service contracts that would address issues buyer-side agents may have questions about, TREC General Counsel Loretta DeHay said. In addition, the commission will ask the Attorney General’s office to clarify whether TREC has the authority to enact a minimum services rule.
“Part of the arguments were that the commission lacked the statutory authority to promulgate such a rule,” DeHay said.
Aaron Farmer, broker/owner of Austin-based Texas Discount Realty, was satisfied with the commission’s actions Monday. Farmer has been at the forefront of the opposing side of TAR’s rule and last year won a court order that halted implementation of a prior version of the rule.
“I see it as a real victory for proponents of limited service listings,” he said.
Farmer helped spark consumer interest in the debate, which had been mostly absent. He informed Haverlah about the proposed rule after she signed a limited service contract with his brokerage. He also launched a Web site, StopTREC.com, which aimed to attract more consumers to the issue. The Web site prompted consumers to fill out a form to be e-mailed to members of the Texas legislature, the state Attorney General’s office, the Federal Trade Commission and TREC.
“The Web site provoked some ill feelings among some of the commissioners…It may have been strong in a few spots, but would I do it again? Yes,” Farmer said.
Farmer, whose limited service listings comprise three-quarters of his business, believes consumers should have the right to purchase only the realty services they want. Limited service brokers would have to charge sellers more money for extra services they didn’t want if TAR’s proposed rule had been adopted, he said.
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