I find myself constantly in the situation to defend the National Association of REALTORS(NAR), who is often portrayed as the big, bad wolf of real estate. I must say that 2005 and 2006 were tough years for NAR. There were well-publicized antitrust suits and outcry that REALTORS are overpaid. I can't argue that some agents aren't overpaid, but I wanted to clear up some of the legal issues.
I was asked on REIclub.com why NAR was fighting discount brokerages, so here's my reply:
Remember that I'm not an advocate for NAR. I'm impartial and just like people base their opinions on facts. I have no issue with discount brokers and believe they provide a valuable service as long as they serve their clients.
That said, the first thing to clear up is that NAR is the National Association of REALTORS. They weren't fighting discount agencies. (Local agencies were involved in legal battles). Here are the few issues that were big the past couple years:
1. I forgot the details, but a few boards up north were being sued because they tried to limit the ability for certain brokerages or agents with "limited service agreements" to put MLS listings on their sites. Again, it's such old news that I forget the details, but agree that this was wrong. Those boards had to change their rules to be fair to everyone.
2. The second issue was some small brokers got upset because they didn't like having to pay for MLS access as part of joining the board. They wanted to get MLS access without paying the full fees. They claimed that you absolutely need MLS access to be a real estate agent and this was an illegal "tying" agreement that limited competition. They lost this suit because they weren't able to meet their burden of proof. You don't need MLS access to practice real estate.
3. Texas and a few other states wanted guidelines around the "limited service" rules. I wrote a few articles on this because people thought Texas was fighting discount brokerages. The rulemakers were just wanting "minimum service" guidelines. Per the law, an agent needs to represent their clients, but some limited brokers would just take a fee, then make the client represent themselves. The clients would then ask questions from the buyer's agent, putting the buyer agent in a bad situation.
Since 90% of sellers aren't very savvy, they'd start making the buyer's agent do work that their agent should do (i.e. explain what the contract means, what their house is worth, etc.). This created liability to the buyer's agent, so Texas implemented simple guidelines.
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