EDIT: After extensive research, I have discovered that it is not directly illegal to publish ads saying “list your house for x% with x realty company.” I thought it was illegal, but it’s not. It is against company policy at several major brokers in the area and highly discouraged by the state real estate commission and association of realtors because “an ad like that will almost certainly violate the regulations requiring ads to be truthful.” I spoke with several authorities about this matter and I asked, “if it’s not illegal, why does no one do this?” The answers I received were all similar: “it’s because an ad like this legally obligates the broker (read: the broker and all agents) to charge that amount for every client no matter what, or else it’s a violation of the advertising regulations.” No individual agent can compete on price via advertising because it will affect the broker and all of the other agents. Further, as others have noted, yes: no individual agent or broker can run ads saying “we’ll beat the other company’s price by x%” because the other brokers will almost certainly complain to the commission and claim it is untruthful advertising since the advertising broker can’t prove that they can always beat every other company by 1%. What follows is my op, unedited.
There is not enough competition in real estate but it’s not because agents are engaged in a conspiracy to fix commission prices, it’s because the entire industry is dominated by two behind the scenes players that prevent innovation and actual competition: state licensing laws and MLS regulations. The licensing laws and MLS regulations are rigged by the big brokers to prevent new companies and new agents from competing. In a way, I agree with this lawsuit, but it’s aimed at the wrong causes.
For instance, I am not allowed to directly compete with another broker by advertising lower commission rates due to STATE LAW in PA. What the F%$#????? How is that ok? I’ve thought that was insanely wrong since I learned about it.
If that law were to change, I would literally design billboard, online, and direct mail ads advertising a lower commission rate. I WANT to compete, but it’s illegal in my state.
Yes, I can easily sell your $500,000+ house for a 4% commission, no problem. Call me right now and I will happily do it, and I’ll provide better service than the entitled 70+ year old socialites who “don’t do email.” <———- that paragraph right there can get me in huge trouble. It contains multiple violations of the Realtor code of ethics and my state’s licensing laws. I have to remain anonymous because of this. I give thousands of dollars in commission rebates away to my higher-end clients, but I can’t advertise this or I’ll get into trouble. This is wrong but I can’t do anything about it.
Realtors are not allowed to say negative things about each other to the public, or we risk getting kicked out and losing our access to the boilerplate contracts we have to use, because again, state law and the MLS regulations prohibit us from using other documents. It’s virtually impossible to operate in residential real estate without being a member of NAR and the MLS. It’s illegal to operate without a license. The big brokers have rigged the rules to make sure no serious competitor ever gets off the ground, but it’s not a secret conspiracy: it’s public policy!