The US Justice Department is filing lawsuit to challenge rules that prevent online and discount agents — many of which take a sub-6% commission — from getting a fair shot at listings. Antitrust regulators are preparing to sue the National Association of Realtors (NAR) over policies they believe will illegally restrict commission discounting and harm online competitors, the Wall Street Journal reported last Monday. This effort by the Justice Department and the Federal Trade Commission is aimed at protecting buyers and sellers of homes and could help contain high real-estate costs in a booming housing market, the newspaper said.
So what prompted this action by the Fed’s? Well from what I know, the National Assocation of Realtors (NAR) is introducing a bylaw this summer which would allow its more than 1.2 million members to withhold property listings from online brokers. This is squarely an attempt by NAR to protect the 6% commission realtors receive.
This isn’t directly related to mortgages, but since realtors work closely with mortgage professionals, it is an important development. I think realtors put in a lot of work on behalf of their clients. Some people think it is just a matter of showing a house, making an offer, accepting and then signing. Well, what you don’t see is how many clients a realtor has to drive around before finally making a sale. Then of course there is the whole closing process – the borrower has unexpeted credit problems, the conditions do not get taken care of, etc. etc. The realtor, and mortgage lender, need to stay on top of all these issues with out any assurance of payment!
Wow! Sounds like a lot of stress to me. How many people are willing to lay out all their services and potentially not get paid on it? You go to Best Buy, you pay as you get your product. You pay for your airline ticket before you take your flight. However, you put a realtor through a lot of stress with the potential for it all falling apart, without an upfront payment. So, I say cut the realtors some slack. There are a lot of good realtors out there that have been burned so many times, I just wonder how they ever keep going.
That is my take on it. If you disagree let me know, I would love to hear from you and see what you think.
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