The U.S. Department of Justice has updated the Competition and Real Estate Web site maintained by its Antitrust Division, adding several states and Washington, D.C., to its list of places that require brokers to perform a specific set of services.
States that have imposed so-called "minimum service laws" mandating services in real estate transactions limit consumers’ ability to choose which services they want and do not want to receive when working with real estate professionals, federal officials have charged.
Industry participants — such laws and regulations are typically backed by Realtor trade groups — have argued such measures are necessary to ensure that consumers receive an adequate level of service in real estate transactions and to prevent consumer confusion about where to turn for services if they are working with a broker that provides few services.
States that DOJ officials added to the Web site list include: Kansas, Maine, Oregon, South Dakota, Washington and West Virginia.
They join the previous list of eight states: Alabama, Idaho, Illinois, Indiana, Iowa, Missouri, Texas and Utah.
And the Web site lists eight other states that "have minimum service requirements but allow consumers to waive those extra services, preserving choice": Delaware, Florida, Nevada, New Mexico, Ohio, Pennsylvania, Tennessee, and Wisconsin — Pennsylvania is an addition to an earlier list at the site.
A spokeswoman for the Justice Department said the laws referenced at the Web site are not necessarily new, but have come to the attention of the agency since the site’s launch in October 2007 (see Inman News).
The Web site also lists 11 states that prohibit real estate brokers from offering cash rebates to consumers: Alabama, Alaska, Iowa, Kansas, Louisiana, Mississippi, Missouri, New Jersey, Oklahoma, Oregon and Tennessee.
That represents a reduction from last year, when the site listed 13 states, including Montana. Justice Department officials have taken action to eliminate rebate bans, which they say could lower the cost of real estate services. The agency sued the Kentucky Real Estate Commission and also took action to oppose rebate restrictions in Montana, South Dakota, Tennessee and West Virginia.
Five states have both minimum-service laws and real estate rebate restrictions, according to the site: Alabama, Iowa, Kansas, Missouri and Oregon.
State code in Washington requires brokers to perform minimum services, the Competition and Real Estate Web site notes, such as the presentation of all written offers, written notices and other written communications to and from the involved parties.
The code also provides that licensees must provide a pamphlet to those receiving their real estate services that contains information about real estate agency laws, and to disclose in writing whom the licensee is representing in the transaction, among other duties.
Jerry McDonald, assistant administrator for the state’s real estate program, a part of the Washington Department of Licensing, said that law went into force in 1996.
The law was intended to address the rise in buyer-brokers — who specifically represent buyers in transactions, he said.
McDonald said, "we haven’t had any complaints from consumers" about the required duties, and "limited-service brokers haven’t complained about this law. It’s not really burdensome," as the service requirements are what "you would expect basically from any business," he said, and allows flexibility for companies to work remotely with clients.
Ken Whitney, general manager for MLS4Owners.com, a company that offers flat-fee real estate services in Washington, said his company has no gripe with the law cited by the Justice Department. "We think it should be a model for the rest of the country. In our view Washington’s law in its current form … is reasonable and does not discriminate against non-traditional business models."
Whitney did say that a section of state law about agent duties does cause some confusion in the presentation of offers, as his company asks agents from other companies to present buyers’ offers directly to MLS4Owners sellers "because we are not a party to the transaction" under its contracts with sellers. Some buyers’ agents instead send offers to the company instead of the seller, and the company must then forward the offers to sellers.
The state code generally "has common sense language, such as requiring that licensees exercise reasonable skill and care and deal honestly and in good faith with people to whom they provide real estate brokerage services," Whitney also said.
In Oregon, a state Senate Bill introduced last year would have loosened rebate restrictions but that law didn’t pass during that legislative session, according to the Justice Department Web site.
Oregon statutes, the site also notes, require brokers to perform specific services to consumers, such as the presentation of "all written offers, written notices and other written communications to and from the parties in a timely manner without regard to whether the property is subject to a contract for sale or the buyer is already a party to a contract purchase."
Officials at the Oregon Real Estate Agency could not be reached for comment.
State statutes in Maine, another state that has been added to the Web site’s list of states with minimum-service requirements, requires "real estate brokers to present all offers to and from the buyer or seller, even if consumes do not wish to buy these services," the Web site states.
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