By Lawrance Morrissey
We've all heard the phrase "Sticking it to the man." Recently, that saying was used in a Sprint PCS commercial. An executive brags that with his phone plan, he is "sticking it the man." Of course, someone points out to him (that since he is an executive) he is "the man." In short, the definition of "the man" is anyone or anything that is holding you down because the opposing entity has the power and/or the money. Nobody is exempt from this concept. In some way, shape, or form, every one of us is being held down by "the man." Whether it's our government, our jobs, our boss', even our phone service. There are rules and regulations that one must abide by to play the game of life.
In the real estate world, I keep running into situations where people who exercise their right to sell by owner and the companies that help them (such as ours) are being treated like second-class citizens. For example, I've been trying to advertise the FSBO Store on television. I'm particularly interested in channel 18 on the Insight Cable real estate channel. I was told flat-out that they wouldn't let the FSBO Store advertise because they thought that would upset the other real estate companies who currently advertise! My question back is: So? They have five other companies on there now that are currently competing against each other! All I'm asking for is a fair chance to compete. Clearly, the playing field needs to be leveled out. Last month, I was solicited by Homes.com, who sold us a package that would allow us to upload all our listings to homes.com as well as Yahoo.com real estate. After I signed up, nothing happened. No password and user ID were issued to me. After about a week, I inquired to find out what was going on. Homes.com took it upon themselves to cancel my contract because they figured out we cater to by-owner sellers. Evidently, they have a policy to disallow fsbo's on their site. "You need to be a licensed agent" they said. When I informed them I am indeed a licensed broker, it made no difference. So I demanded to see their "policy" in writing. They promised to send it, but never did.
Many of you have heard about the new "Minimum Service Requirements" law that was passed by the state on July 1st. That is another attempt by "The Man" aka, The National Association of Realtors, to insure their future. The law basically states that the agent on the MLS listing, needs to fully service the home seller by handling the negotiations, all the paperwork on the transaction, and attend the closing. While that is the norm in full-service real estate, that trend was starting to change with the advent of "flat-fee" MLS services. With a flat-fee MLS package, a broker would simply charge a flat fee (usually between $500 - $700) to put a home on the MLS. The reason this worked so well is because the listing agent and the buying agent are almost always two different people. As long as a "fair" commission is being offered, buyer's agents would gladly show the home. In this situation, if the seller is not being fully
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represented by the flat-fee MLS company, the buyer's agent would then have to assume "limited agency" duties. That means that with written consent; the agent can work directly with the buyers and sellers of the same property. In theory (and sometimes in reality) this is a conflict of interest, since the buyer's agent is technically working for both parties now. The agent is supposed to negotiate the best deal for the buyer, and now the best deal for the seller? That's the argument the NAR used to get this new rule implemented. It's to "protect" the seller. On the surface, it actually makes a bit of sense to those who don't know any better.
In reality, it's nothing more than an excuse to stifle competition from flat-fee MLS companies who were actually making a dent in the real estate community. The reality is that limited agency works exceptionally well. That's because there is one less person getting in the way. In all real estate transactions, the agents are merely the facilitators, it's the buyers and sellers that make the decisions. Keep in mind that everyone wants the same thing in the end. The seller wants to sell, the buyer wants to buy, and the agents want to close so they can receive their commissions. When I used to sell flat-fee packages last year, I had agents who took on the limited agency role admit it was the smoothest transaction they had ever done. When they needed a question answered, they didn't call me, who in turn would have to call the seller, and then have to wait for me to get back to them, they simply called up the seller and asked their questions directly. Instant answers. Imagine that. The other major advantage to flat-fee MLS programs, is that it saves about 50% of the commission normally paid by sellers.
So how does the new minimum service requirement affect the FSBO Store as a company? Well, it doesn't. That's because the Metropolitan Indianapolis Board of Realtors (MIBOR) called our real estate company a year ago, and told us we needed to provide minimum services. We, unfortunately, had to revamp our MLS packages and pass the additional costs on to the sellers at that time. One would think that since Indiana is ranked #1 in foreclosures, MIBOR and our local politicians should be expanding home selling options, not limiting them.
The thought that keeps creeping into my mind: Is this legal? I'm not a lawyer, but from what I understand about anti-trust laws, it sure sounds sketchy. Thankfully, I'm not the only one. In fact, the Department of Justice, Antitrust Division interviewed me on the subject. They were particularly interested when I told them we had to change our MLS packages and raise our prices in order to compete.
Because I still believe in American freedom, I will continue to challenge any company that tries to unfairly (if not illegally) stifle competition. Just think, every time a successful by-owner transaction takes place, it's one more instance of us underdogs "sticking it to the man."
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