Has any agent ever been found liable under the Sherman Antitrust Act??

By
Real Estate Agent with Bayou Properties Realty

Sherman Antitrust Act

Real estate licensees are subject to the federal antitrust laws, enforced under the Sherman Antitrust Act, that prohibit unfair trade practices in the United States. These laws are rooted in the idea that competition creates the largest choice of products and services for consumers, providing them the broadest range of price and quality. The most common antitrust violations that are associated with the real estate industry include price fixing, boycotting competitors and allocating customers or markets.

1. Avoid Price Fixing:

  • Avoid discussing fees or rates with any other firms.
  • Never tell a client that your rate or fee is “the going rate.”
  • Make it clear that fees and rates are generally negotiable.
  • If you do set firm rates/fees, make it clear that those are only for your own company.

2. Do not Boycot Competitors

When two or more parties agree to abstain from dealings with other parties to limit competition, they are essentially boycotting their competitors. In real estate, this may occur if a brokerage is unfairly denied access to a particular real estate professional organization or if two or more brokers agree to withhold their patronage from certain brokers.

3. Do Not Allocate Market Areas

If two or more brokers agree to divide a market area up so that each broker only covers a certain segment of that market area, the allocation of these segments is illegal because it restricts open-market competition. For example, if Brokers A, B, C and D are the four major brokers in a city, they cannot have an agreement to exclusively represent the northern, southern, eastern and western areas of the city, respectively. Allocation of markets does not pertain solely to geographic regions; it is also illegal to divide the market in terms of property values.

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My thoughts on price fixing:
Basically, we may not say there is a going rate we charge - even if it's true.  And really, it's not true anyway.  Sometimes it feels like there is a going rate.  But, there are all kinds of limited service discount brokers out there.  They probably won't help you sell your home in my market, and some get paid up front.  Prices are negotiable, but there seems to be a percentage ceiling that's been established as an accepted norm.

My thoughts on boycotting
I don't do it.  It's not fair.  Usually it can be seen as slanderous or libel.  Use the golden rule.

My thoughts on allocating markets
I usually stick to my market because it's my area of expertise... but in this business, you sometimes have to be willing to work just about anywhere within reason to put food on the table - and to best serve your client.  If you make sure you are always trying to serve your client the best, then you will know your geographic limits.  But why would anyone in real estate ever try and split up territories with other brokerages?  That seems highly counter-intuitive.

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Has any agent out there ever heard of being found liable for violating the Sherman Antitrust Act?

 

 

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Rainer
51,033
Christopher Bonta
The Bean Group - Londonderry, NH
Realtor, Integrity and Honesty

Don, your statement about Realtors not being able to introduce themselves to other Realtors Listings is  not true. Here are some examples of what Realtors can do:

1) A Realtor can call me up and ask me when my Listings are going to Expire and I would have to give my competitor the information, likewise I can ask him/her for the experation dates of their listings.

2) A Realtor can send promotional materials to a Seller who is listed with another Realtor and even discuss Listing the property with them after the experation date of their current listing, as long as the Seller contacts the Realtor first. We do not contact Clients of our fellow Realtors because it violates our Code Of Ethics. There may be no law that forbids this but we are an Association with our own by-laws and to be a member we have to agree to follow our Code.

February 12, 2009 04:59 PM #12
Rainer
9,804
Mercure Volt
Elite Realtors of New Jersey - Montclair, NJ

Great discussion!  I appreciate the description of how Unfair Trade Practices apply to the real estate profession, and how competition provides more choice and quality of services. I love learning from the collective knowledge and wisdom of the Active Rain forum. Thanks for posting. 

February 12, 2009 07:09 PM #13
Rainer
8,602
Adam Wolfe
The Law Office of Adam Wolfe - Princeton, WV

I worked previously in the Funeral Home business and it's interesting because Funeral Rules require that any person that walks into a funeral home can ask for a complete list of every service and product that is charged for called a General Price List.  Even if that person is a competing Funeral Director, you would still have to give them a General Price List.  I worked for a brand new funeral home that went to the trouble of researching all their competitor's prices and then made their prices two to three times more then everybody elses (and then raised them again 4 months later after opening).  Very interesting discussion!

February 12, 2009 07:16 PM #14
Rainer
17,764
Chris Oliver
Century 21, Preferred Properties - Reynolds Plantation, GA

Also a Realtor can send information/solicitation as a 'blanket' mailer. Just make sure you send to the entire block/subdivision/section when you do. Happily I have often gotten a better listing from the neighbors than the target this way.

February 12, 2009 08:51 PM #15
Rainmaker
76,591
Jennifer Walker-Derby
Re/Max Westside - Marietta, GA
Real Estate Extraordinaire

I avoid these topics like the plague and always consider every person that asks to be a shopper.  good luck

February 12, 2009 09:11 PM #16
Ambassador
559,386
Julie Chapman
Lennar - Jacksonville, FL
New Homes Sales

"Do not Boycot Competitors

When two or more parties agree to abstain from dealings with other parties to limit competition, they are essentially boycotting their competitors. In real estate, this may occur if a brokerage is unfairly denied access to a particular real estate professional organization or if two or more brokers agree to withhold their patronage from certain brokers."

This did not stop the broker I worked for before I owned my present business to write a letter to my firm that allows that their firm will not pay a commission to myself nor any agent that works for me - just my firm - no other firm that is a member of our multiple listing service.  

My response was a letter that basically allowed that I would never harm my sellers by refusing to allow any agent to show or sell a property or be compensated and I still pay commissions to their firm. 

 

February 12, 2009 09:18 PM #17
Rainer
51,033
Christopher Bonta
The Bean Group - Londonderry, NH
Realtor, Integrity and Honesty

Julie, I can definitely appreciate your frustration and aggravation regarding what happened to you and your firm, but I don't think your former Broker is violating any law. He would only be doing so, if he went around to other offices and got them to adopt his policy then he would be violating the Anti-Trust law.

Just keep in mind that what goes around comes around and if you conduct yourself as a professional, others will see it and eventually he will get what he deserves.

February 12, 2009 09:54 PM #18
Ambassador
559,386
Julie Chapman
Lennar - Jacksonville, FL
New Homes Sales

Chris,

I find it amazing that anyone would waste their time with such petty childishness but in my opinion, do believe that it should fall under Anti-trust.  There is more than one Broker in their firm and my question for the Federal Government's Antitrust Division is does this  fall under the "2 or more brokers" clause?

I am not an attorney and this is not legal advice but my right to free speech. 

February 12, 2009 09:59 PM #19
Rainer
51,033
Christopher Bonta
The Bean Group - Londonderry, NH
Realtor, Integrity and Honesty

Julie, good point you could contact the Federal Governments Anti Trust division about this and see what they say, there contact info is probably on your State's  NAR site, I know my State has the info on theirs.

February 12, 2009 10:07 PM #20
Rainmaker
558,659
Chris Olsen
Olsen Ziegler Realty - Cleveland, OH
Broker Owner Cleveland Ohio Real Estate

As an agent and NOT an attorney, we should be very careful about not venturing into legal territory, but instead, leave it real estate attorneys who are more aware of case law, precendent, and the like.  Less is more, when it comes to running one's mouth.  The golden rule will take one a very long way in life.

February 12, 2009 10:09 PM #21
Anonymous
Anonymous
ann

Well i can assure you that it does happen in my area.  I am a discount broker and we are definately boycotted, clients contacted for solicitation, and the list goes on and on.  Unless you are prepared to handle this with the feds...what else can you do about it but let them be unethical and know that what comes around...goes around. 

February 12, 2009 10:31 PM #22
Anonymous
Anonymous
Jennifer Tellier

I am a new agent and I often get nervous about discussing my commission. Its so unfair that it can be such a grey area.

February 12, 2009 10:35 PM #23
Rainmaker
847,230
J. Philip Faranda
J. Philip Faranda (J. Philip R.E. LLC) Westchester County NY - Briarcliff Manor, NY
Broker-Owner

WE have the same urban legend here in New York about a Long Island based firm but they didn't lose their license- they were the impetus for the current laws.

Commissions vary immensely within a 60 minute drive from my office. However, market allocation is a potential powder keg in my view...all too often I have listing agents incredulously ask how I got a listing in "their" town, and then state that you can't service a listing unless you sleep in that zip code. Funny. I didn't know I needed a passport to go from Ossining to Chappaqua. What they really object to is me taking a slice of the pie from them.

Some of us are indeed specialists in a specific town or zip code. Others, like me, cover a whole region. I have lawn signs up in 6 counties. By am large it is all good, but you will get the occasional local agent who has diarhea of the mouth about my reach.

February 13, 2009 05:02 AM #24
Rainmaker
287,122
Martin Kalisker
WEICHERT, REALTORS® - Synergy - Brookline, MA
Weichert, REALTORS - Synergy: MA Real Estate & Mor

The sales agent wouldn't be held liable.  It would be the broker.  And yes, there are documented cases of brokerages losing their licenses and being fined for violations of the Sherman Anti Trust Act.

February 13, 2009 09:04 AM #25
Anonymous
Anonymous
Clear Lake person

Of course there are these set of laws that we all must obied by, but come on do think that everyone is going to follow it like many other known truths? To Thai own self be true! As for the rest they complain because they are not working and doing there job which would have won them the business in the long run.

February 13, 2009 12:08 PM #26
Rainer
25,445
Sandy Gleason
North Pointe Realty - Buhl, ID
Realtor for Southern Idaho-Magic Valley

Good information to use as a reminder.

February 13, 2009 03:29 PM #27
Rainer
20,196
Christopher Johnston
The Johnston Team - Metairie, LA

If you feel that you are worth, and won't work for less than, 6% you can choose to not work with a seller that won't pay it. Rates are not fixed by law but if you don't want to work for less than a certain rate you cetainly have that right.

February 13, 2009 07:06 PM #28
Rainmaker
128,113
Mike Henderson
Your complete source for buying HUD homes - Littleton, CO
HUD Home Hub - 303-949-5848

Nice post, helpful to stay out of trouble.

February 13, 2009 10:49 PM #29
Rainer
300
Diane Mireles
Prudential Gary Greene Realtors - Friendswood, TX

Brian its not about splitting areas it is about selling and buying in the area of your expertise which falls under our professional standards and representation, If you review some of the lawsuits from these situatuions it may help put it in perspective for you.

March 06, 2009 11:47 AM #30
Rainmaker
185,089
League City, TX - Worrell Team, REALTORS, GRI, CNE
Bayou Properties Realty - League City, TX

First off, I agree with everyone who says it's okay to discuss your fees publicly.  There is nothing wrong with that.  You just can't make agreements to charge a set price between brokers.  Thanks for your contribution on this one Adam Wolfe!

J. Phillip -Very funny... there's plenty of business for everyone.  You have to take what you can.  You are the only person that can make sure that your client is in good hands.

Diane Mireles - It is about splitting areas.  That's officially illegal according to the Sherman Anti-Trust Act.  The Sherman Anti-Trust Act prevents companies from creating expressed agreements to split areas.  You are allowed to have your own personal area of expertise.  I had an attorney review this for me!  I'm pretty sure I have a grasp on the concept.

It's sure is great to share everyone's perspective on Active Rain! Thanks for all of the comments to all who contributed.

March 06, 2009 01:12 PM #31
Show All Comments
Rainmaker
185,089

League City, TX - Worrell Team, REALTORS, GRI, CNE

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