The New Mexico Real Estate Commission has delayed consideration of changes to real estate regulations that would require all real estate brokers in the state to provide a minimum level of service to consumers, whether or not consumers want all of those services.

The New Mexico Real Estate Commission has delayed consideration of changes to real estate regulations that would require all real estate brokers in the state to provide a minimum level of service to consumers, whether or not consumers want all of those services. Federal antitrust officials strongly oppose the proposed regulations.

Officials in the Justice Department’s Antitrust Division last week sent a letter to the New Mexico Real Estate Commission that urged the commission to reject the amendments, charging that the changes would restrict consumer choice and could raise the cost of real estate brokerage service.

The commission, which met Nov. 3, and its legal counsel were not immediately prepared to respond to the Justice Department letter, said Wayne Ciddio, administrator for the commission. “We deferred until probably January or February.”

Justice Department officials also opposed another proposed amendment that would have classified a type of shared online property listings, known as Virtual Office Web sites, as advertising. Ciddio said that rule change was rejected – “The commission didn’t really feel strongly one way or another about that.”

State-imposed measures requiring a minimum level of service are cropping up across the country, as Realtor trade groups are pushing real estate commissions and state legislatures to establish restrictions targeting real estate companies that offer more limited forms of representation in real estate transactions. And the Justice Department, acting alone or in conjunction with the U.S. Federal Trade Commission, has taken note, opposing the measures in a handful of states.

In New Mexico, the real estate commission introduced new minimum-service requirements two years ago but allowed consumers to opt out from receiving some services. The proposed rule change would have eliminated this ability to waive services consumers receive from a real estate broker, and provided that real estate professionals in every transaction are responsible for “accepting delivery of and presenting to the client/customer all offers and counteroffers to buy, sell or lease the client’s/customer’s property or the property the client seeks to purchase or lease in a timely manner.”

Also, the proposed change would have required real estate brokers to provide “assistance to the client in developing, communicating, negotiating and presenting offers, counteroffers and notices that relate to the offers and counteroffers until a lease or purchase agreement is signed and all contingencies are satisfied or waived.”

Under the current regulations, consumers must agree in writing to waive services if the real estate licensee they are working with does not present all offers or counter offers in a timely manner or assist in complying with the terms and conditions of the contract and with the closing of the transaction.

Ciddio said the commission formed a task force to consider changes to real estate regulations, and the task force met during the summer. Nine of 10 members of the Rules Task Force are Realtors, and the other member is a representative from Olympia Funding, a mortgage lender. Peggy Comeau, association executive for the Realtors Association of New Mexico, and Cheryl Ragsdale, president of the state’s Realtor association, were also members of the task force.

Comeau said today that the association continues to support the proposed amendments to the state real estate regulations. “I can’t see us changing our position. We basically believe that consumers deserve a certain number of services from a real estate agent. There are many pitfalls that go in with buying and selling a house.”

Comeau, who said she hasn’t yet viewed a copy of the letter that was sent by the Justice Department to the New Mexico Real Estate Commission, said the association will “most possibly” consider whether to pursue a rule change through the state Legislature related to minimum-service requirements, though she said the association hasn’t yet made that decision.

The Rules Task Force raised questions about whether consumers knew what they were getting into when they signed up with limited-service real estate brokers, Ciddio said. “There was a concern that consumers didn’t really know what they signed up for when they signed up for limited-service agreements,” he said. As for consumer complaints to the real estate commission about limited-service brokers, Ciddio said, “I personally didn’t hear anything,” and he said he isn’t aware how many consumer complaints have been filed against limited-service companies.

Ciddio said the Justice Department letter to the commission was not totally unexpected. “I had had a call from an individual in the Justice Department about a week before the rule hearing. He wanted to confirm that we had a proposed rule and I told him that we did. I e-mailed him all the rules. He called back to confirm his understanding of what the proposal was all about.”

Also, two discount brokers had testified to the commission that the proposed change to real estate regulations “would eliminate consumer choices and consumer ability to choose a more limited service arrangement for the broker — both of them sort of echoed that same sentiment,” Ciddio also said.

David Steinborn, president of the New Mexico Real Estate Commission, said the commission must analyze whether it will be protecting the public with changes to real estate amendments, and whether consumers want those protections.

“Our issue was that we wanted to come up with what we felt were some minimum-service requirements that we thought any agent would want to provide to the public,” he said, and the Justice Department’s reaction to the proposed amendments “was a little bit of a surprise to us.”

Steinborn said that since he became involved in the minimum-service amendment, “I’ve…found out that other jurisdictions throughout the country have also had to deal with this. Our intentions were a lot more noble. All we were trying to do was come up with a way to protect the public.”

Representatives from limited-service companies have alleged that real estate trade groups are backing minimum-service measures to keep commission rates high and to drive out low-cost competitors, though Realtor associations have claimed that they support the measures in the interest of protecting consumers and clearing up any confusion that may result in transactions involving a consumers who is not fully represented by a real estate professional.

Lisa Hebenstreit, a New Mexico real estate broker who offers flat-fee, limited-service property listings and also represents home buyers, said she opposes the rule changes under consideration by the commission. “Our position is that it’s really antitrust, it’s really limiting competition. It’s forcing all agents to perform the same level of service and not allowing agents to perform tiered services and discounted services.”

She added, “It’s bad for consumers because it takes away their ability to choose. It just forces them to pay high rates and high prices. I think it almost appears to be like a maneuver to fix rates in the real estate industry and keep commissions high and keep charging people high rates.” Hebenstreit said she expressed her thoughts on the proposed changes to Ciddio and attended the commission meeting last week.

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

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