Sunday, May 29, 2011

U.S. Department of Justice Champions Buyers Rebates (And The NYS Attorney Generals Office)

Many brokers in NYC are unaware of what a commission rebate is or how it works. Many clients are surprised they are legal because they have been told by others they are not. I think free markets work-competition creates dynamic products and pricing that benefits all. And that's not just at alternative firms but full service firms as well. How? Well, it helps define who offers what and what the consumer can expect from a particular service model.

In many cases the application of a "Commission Rebate" is the tipping point that will allow a deal to go through, almost like a little grease to make a property affordable to the buyer. This benefits the listing broker as well as the seller at no additional cost. Successful full-service brokers are not threatened by such a model as they become the beneficiary of it's results: a closed deal. Brokers who are also sophisticated business people also understand the concept of free market competition. In the past the restrictive NYC real estate model only benefited the firm and in reality it hurt individual agents, buyers and sellers. Times are changing though and technology is forcing transparency into a once monopolistic business.

What I am trying to do is offer buyers an alternative option when conducting a real estate transaction. Not just "discount service" but honest and critical analysis of the property they are considering purchasing. Our model certainly is not for everyone, however it is appropriate for many buyers in today's market.

What the Department of Justice has to say about alternative real estate models

What the NYS Attorney Generals Office Has to Say: (They have interviewed me a few times, they like what we are doing).

NYS ATTORNEY GENERAL --Illegal anti-competitive practices hurt the real estate industry as well as the consumer

Contact The Antitrust Bureau
Participants in the real estate industry are closer to daily real estate activity and more
likely to observe anti-competitive conduct. We rely on reports from real estate lawyers, brokers, purchasers, and others in the industry. Please feel free to contact us with your questions and concerns.
Antitrust Bureau
State of New York
Office of the Attorney General
120 Broadway, 26th Floor
New York, NY 10271
 What to Look for
Illegal anti-competitive practices in real estate transactions can include:
  • Agreements among brokers not to charge
    commissions under a certain level;
  • Agreements among brokers not to work
    with discount brokers;
  • Refusals to deal with brokers who offer
    rebates to their clients;
  • Refusals to show properties that are for
    sale by owner (FSBOs) or listed by a discount
  • Agreements among brokers or multiple listing services (MLSs) to prevent competition from real estate websites.
Agents and Fiduciary Responsibilities
Frequently, a real estate agent’s fiduciary duties are not well understood by consumers, and even by some real estate professionals. Consumers should receive full disclosure of all the information they need for a fair real estate transaction. For example,
  • Buyers must receive the required disclosure form listing the broker’s fiduciary duties and disclosing whom the broker represents.
  • Buyers should be informed if the agent representing them is going to be paid by the seller’s broker.
  • Buyers should feel free to inquire about how much commission their broker will earn on a transaction.
  • Both buyers and brokers should know that rebating commissions is legal in New York.

No comments: