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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Comments 31 New Comment

Rainer
25,445
Sandy Gleason
Realtor for Southern Idaho-Magic Valley
North Pointe Realty

Good information to use as a reminder.

February 13, 2009 03:29 PM
Rainer
20,196
Christopher Johnston
The Johnston Team

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
Rainmaker
128,109
Mike Henderson
HUD Home Hub - 303-949-5848
Your complete source for buying HUD homes

Nice post, helpful to stay out of trouble.

February 13, 2009 10:49 PM
Rainer
300
Diane Mireles
Prudential Gary Greene Realtors

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
Rainmaker
178,702
League City, TX - Worrell Team, REALTORS, GRI, CNE
Bayou Properties Realty

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
Rainmaker
178,702

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

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Additional Information

Author Bio: Brian Worrell, leader of the Worrell Team, is a Realtor specializing in League City, Clear Lake and surrounding areas in the SE Houston Metro area, also known as the Houston Bay Area. Brian grew up in the Houston area and received a BBA in Marketing from the University of Houston. He and his team strive to provide their clients high-end service in order to gain advantages through unique marketing techniques that have proven effective: cutting edge technology, search-engine optimized web marketing, formal negotiation training, commercial and economic understanding of their clients’ best interests, professional photography, access to legal counsel, as well as other services and techniques that are unique in the industry.

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