South Carolina has lifted a short-lived ban on consumer rebates and incentives in real estate services, freeing up real estate professionals to offer these types of inducements to home buyers and sellers.

The South Carolina Association of Realtors had been working to lift the ban since it was passed in 2004, according to Nick Kremydas, CEO of the trade association. Kremydas said the ban on rebates was an accidental byproduct of a poorly worded law provision that passed in 2004.

The U.S. Justice Department has taken issue with similar laws in other states, investigating the competitive effects of such bans. The agency last year sued the Kentucky Real Estate Commission over restrictions on consumer rebates and reached a settlement to lift the ban in July 2005.

The South Dakota and West Virginia real estate commissions also cancelled rebate and gift bans in response to DOJ investigations.

In South Carolina, Kremydas said the issue of rebates and gifts has been a “non-issue.”

“Our members are not afraid of competition,” said Kremydas, who was a lobbyist for the South Carolina association for more than 11 years before becoming CEO. “That’s what our whole industry is based on.”

The South Carolina association introduced a bill to allow rebates in 2005, the CEO said. “We clarified that brokers could advertise and market properties any way they saw fit as long as they were offering those discounts or rebates to parties to the transaction.”

State bans on real estate gifts and rebates have been a concern for companies offering these incentives as part of their strategy to gain customers. More than a dozen states prohibit real estate brokers from offering rebates on commissions, according to a September 2005 report from the General Accountability Office.

RealEstate.com, which offers gift cards to consumers who transact with Realtors in its affiliate network, was pleased with the South Carolina decision. “By allowing real estate brokerages to offer incentives and rebates, both agents and consumers can have a competitive edge in negotiations – something that couldn’t be more important in today’s changing market,” said Eric Cunliffe, senior vice president and general manager of RealEstate.com

RealEstate.com is a real estate portal where consumers can browse for-sale properties and connect with agents. The site is owned by LendingTree.

Kremydas added, “I think our state is in a very good place where we have a good law that addresses these concerns that have been raised in other states.”

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