Education Committee News
REALTORS® Subject to Same Laws In Person or Online
So, you’re a good REALTOR®, professional, you return your calls, you take care of your clients. You’re courteous and fair to your fellow agents, and you do your best to conduct your business in an ethical and legal manner.
But even good agents, as described above, can get themselves into trouble especially with a relatively new trend in an area where a violation can not only cost you your license, your money, but also your freedom. I am talking about ANTI-TRUST laws and online violations.
There are many forums out there where REALTORS® collaborate, exchange ideas, thoughts, get questions answered, and build stronger relationships with their colleagues.
Facebook has tens of thousands of real estate forums all over the country, dozens in Northern Virginia alone. The drawback is some agents forget that they are still subject to the same laws, Code of Ethics and regulations, whether in person or online, hence nightmares can begin.
The online world is so crucial to us for lead generation, exposure, connection and has changed the way we do business on so many levels. Social media has changed the way we interact, personally and professionally.
I see so many Anti-Trust violations on closed and open forums, and yet the posts seem so innocent and get “likes”, replies, various feedback and in some cases, heated debates.
What in the World is Anti-Trust Anyway
Anti-Trust is a set of laws passed as far back as 1887 and have gone through transformations via several Acts, most recently in 1950. The most common act we look at in real estate is the Sherman Act of 1890. Enough about history, let’s get down to how this relates to 2019, and how some agents are completely exposing themselves to major violations.
With respect to real estate, Anti-Trust basically has several areas where violations have landed a few agents and brokers in federal prison over the years. Not to mention loss of license, fines, attorney bills and the emotional destruction.
- Price Fixing: When two or more competing brokers or agents get together, discuss commissions and agree to a fixed price the consumer pays, no matter which firm they use. Of course, the idea here is that consumer will pay more money in commission rates because of non-competition.
- Territory Assignment: Where two or more competing brokers or agents get together and agree to a geographic division of a neighborhood, town or any jurisdiction. This again limits competition, hence leaving the consumer with potentially having to pay higher commission rates.
- Boycott: When two or more competing brokers or agents get together and agree to work against a firm by boycotting it. For example, discount brokerages have existed for years, and over time services are being offered in a variety of ways, such as “a la carte”, as opposed to a full-service company. The violation will occur when there is collusion to not show properties listed by those firms to “put them out of business”, or make them less influential. Of course, this may hurt the consumer in a case where the best matching house is listed by one of those firms.
Let’s consider some live examples I have seen on a national level:
- “Company X charges X and I think if we all stuck together, clients will base their decision on service alone.” Although I understand the intent, sell service not commission, this is a clear violation.
- “Company X only pays X to buyer agents, I will never show their properties and let’s all send them a message, we deserve better compensation”. I don’t think you need an explanation.
- Company X is in area “A” and they continue to come into my area to sell homes, we should just stick to our own markets, I called the broker, but he refused”. So glad the broker refused, probably realized the gravity of the request for dividing geography.
I can go on and provide so many examples, but I think you get the idea. No matter which platform you’re on, you are still subject to Anti-Trust laws. There is a famous case where two competing brokers were having a private dinner at a restaurant and started discussing commissions and how it is getting harder and harder to make a profit. During the conversation, they agreed to keep the commission at a certain level and not provide any exceptions to their agents. This way, it doesn’t matter where the consumer goes, they pay the same rate and they were counting on random selections by clients that will hopefully benefit both firms.
The trouble began when the table next to them had an Assistant U.S. attorney dining with his wife and heard the entire conversation. Bottom line, both brokers lost everything, and both ended up sentenced to a short sentence in a federal penitentiary.
Bottom line don’t engage in any conversation that even resembles a violation. In fact, if you are in the middle of chat and someone brings up a potential or clear violation, you have an obligation to state that this may be bordering on Anti-Trust violations, and I am leaving this conversation; whether in person or online.
If you want to learn more about anti-trust and social media, access the NAR video library here.
And here for their full offering of anti-trust articles.
View the 2021 Code of Ethics.
View more information on Ethics Complaints
Harry Yazbek, Chair