Are Blog Discussions About Retainers and Pricing Policies a Price Fixing Lawsuit Waiting to Happen?

By
Real Estate Agent with Atlanta Communities Real Estate Brokerage GREC #208281

Everyone seems to know that it's not OK to talk about commissions.  Fellow real estate agents can't have a discussion about what they charge.  You can advertise what you charge and other non-agents can discuss and compare commissions that are charged but competing members in the same business can't discuss prices with each other.

But how about discussing fee structures?  How about discussing things like charging an upfront retainer or charging processing fees in addition to commissions?  Is it just illegal to discuss specific prices or is it also illegal to discuss more general pricing policies and strategies?

I've seen several featured posts over the past months where these general pricing policies and strategies have created discussions amongst fellow real estate agents. I'm always uneasy about joining in the discussion.   I'm not an anti-trust lawyer so maybe I don't understand the nuances of some of the guidelines that the FTC has on their website.

On the FTC page on Guide to Antitrust Laws  it states that:

Price fixing relates not only to prices, but also to other terms that affect prices to consumers, such as shipping fees, warranties, discount programs, or financing rates. Antitrust scrutiny may occur when competitors discuss the following topics:

  • Present or future prices
  • Pricing policies
  • Promotions
  • Bids
  • Costs
  • Capacity
  • Terms or conditions of sale, including credit terms
  • Discounts
  • Identity of customers
  • Allocation of customers or sales areas
  • Production quotas
  • R&D plans

So, what do they mean by "pricing policies"?  Is that something like the policy of charging retainer fees? Is it something like discussing the policy of charging some kind of administration or processing fees?  "Policy" seems to mean that a specific number isn't the key factor.  It sounds like just the general idea is enough to cause problems. 

What do they mean about discussing "costs"?  Is it like when someone discusses specific details about how much it costs them to stay in business?  What their splits are and how little they are left with?

What do they mean by "discounts"?  Is this like when someone discusses whether they give a customer a discount if they buy and also sell a house with them?

Is it a problem when there are discussions about wanting to raise the requirements, i.e. cost and education, in order to become a real estate agent?  I've seen discussions about doing this so that we can then all be able to demand higher compensation or demand upfront retainer fees.  That kind of discussion doesn't sound like it is for bringing lower prices to the consumer, does it?

I'm no expert but words are words.  Am I reading too much into these FTC Guidelines?

What if there was a discussion on a blog post about the joys of charging an upfront retainer fee? Let's say that 186,000 members of ActiveRain all see other agents chiming in  and saying that they all are going to start trying this pricing strategy.  No one says how much they will charge, but now the consumer can't find any agents who don't charge an upfront retainer fee.  Do you see that as a problem?  Would that be something that could trigger an Antitrust lawsuit?

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About the Author:  Tim Maitski has been a full time Realtor since 1999. He has sold several hundreds of homes in areas around metro Atlanta.  Tim started with RE/MAX Greater Atlanta and is now with Atlanta Communities Real Estate Brokerage.

Along with blogging on ActiveRain, he provides one of the best real estate websites in Atlanta at www.HomeAtlanta.com where he has market price charts of 37 areas around Atlanta with data going back over 10 years.  His online Property Tax Calculator allows you to compare property taxes in many counties and cities around the Atlanta area.  He provides the Atlanta MLS Power Search Tool that allows searches of homes using over 35 specific criteria.

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  1. Donald Bradbury 07/17/2010 09:56 PM
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Ambassador
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Bryan Robertson
Innovator, Writer, Speaker
Catarra Real Estate, Inc

I'll preface this by saying I'm not an attorney and am not offering legal advice.  However, I do have a fair bit of experience in discussions around anti-trust considerations (from a previous career).

Since commissions are variable and negotiable, I see nothing wrong with discussing the prevailing public practices of any brokerage.  A significant number of brokerages make a point of advertising their commissions as a means of generating publicity and business.

Here's the deal, the FTC will NEVER come after you for discussing something in the public domain.  In my experience, they are only interested in behavior that sets to establish a standard through collaboration (and possible conspiracy).  I'd welcome a counter opinion but that's been my experience.

What I would consider inappropriate discussion about commissions is the terms under which I might reduce my commission or the any other incentives to retain a client.  However, in those cases I would avoid specifics and have no issue discussing general ideas.

July 18, 2010 12:53 PM
Rainmaker
446,986
Tim Maitski
The Agent Who Uses "Watermelon Tough" Sign Posts
Atlanta Communities Real Estate Brokerage

Bryan,   What the FTC does and what it can do are probably two different things. But to be safe, I'd probably stay away from the worst case scenarios.  Just because they don't prosecute many things doesn't mean that they won't in the future. 

Here's something that's from the realtor.org article that should make you think twice about making annoucements, especially on real estate forums such as ActiveRain.

In one infamous case a court found that an unlawful agreement had been reached when one competitor announced to others his intention to raise his commission rates and the other competitors adopted the same course of action within a short period of time. The court construed the announcement as an invitation to conspire and the subsequent action by the other competitors as acceptance of that invitation. An inference of conspiracy can be drawn even if the other competitors had each already decided independently to implement the particular policy, but had not already done so.

It is therefore imperative that brokers never discuss with or reveal to competitors their intentions concerning fees or other competitive business activities. Such actions will "taint" not only the subsequent decisions made by the broker who raised the subject, but also the decisions of all other competitors to whom the discussions or announcements were directed.

I guess you can announce price changes to the public in general but not to more specific competitors or groups of cometitors.

July 18, 2010 01:26 PM
Rainmaker
1,080,090
Bryant Tutas
Broker/REALTOR, Tutas Towne Realty, Inc
Bryant Tutas-Tutas Towne Realty, Inc

Great discussion Tim. Well done. And beleive me I do proceed with caution. Thanks for the reminder

July 18, 2010 02:34 PM
Rainmaker
446,986
Tim Maitski
The Agent Who Uses "Watermelon Tough" Sign Posts
Atlanta Communities Real Estate Brokerage

Here's a question.  I just saw a feature post where an agent is asking other agents how they feel about giving a buyer a rebate of part of their commission.  Most agents say that they never give any sort of rebate and are offended at people who ask for such a concession. Is that not a discussion between two or more competitor about pricing policy?  Encouraging fellow agents to stand firm on their commissions isn't going to bring lower prices to the public. Maybe I'm just getting paranoid and seeing price fixing ghosts now.

July 18, 2010 09:38 PM
Ambassador
1,070,182
Bryan Robertson
Innovator, Writer, Speaker
Catarra Real Estate, Inc

Tim - Yes, I'd agree that discussing a rebate could be considered a pricing policy but only if it's done as a standard and not the exception.  It really is a tough call because sometimes the exceptions become the rule and when that happens, we could have a problem.

 

July 19, 2010 12:15 PM
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