Free Enterprise or Consumer Protection?

Real Estate Battle Lines... Wow, last week's Dispatch, "Realtor Racket": Are Commission Rebates Legal? (Aug 16), really stirred the juices. Importantly, no one wrote that laws preventing the payment of rebates do not apply to commercial real estate.

Greg Schenk at the Schenk Company in Columbus, OH, worries about the exodus of experienced brokers. "As a top tenant rep broker and SIOR member I can tell you that many brokers do rebate fees. We are very much against it. I feel it cheapens what we do and makes clients not value our time."

Mark Subervielle with eComm Realty, Metairie, LA, argues for flexibility. "[Minimum service] laws fly directly in the face of anti-trust and free enterprise and are a blatant attempt by threatened competitors to thwart their competition. Anyone in the commercial real estate field has taken consulting assignments, market survey/study assignments, co-listed deals with limited services such as showing and marketing, but not actually negotiating the contract, for example."

"H.R." Ebtehadj with TC Austin Properties in Austin, TX, opposes discounting. "In Texas 'minimum service requirements' go hand in hand with the state law in regard to the Broker's fiduciary duty to his or her Client. By cutting some services a Broker may undermine his or her duties to the Client without the Client's knowledge, or maybe even the Broker's knowledge. Fiduciary duty cannot be broken down into sections and neither can the Broker's duty to the Client."

Bob Gibbons with Reata Commercial Realty in Dallas/Fort Worth wants his freedom. "I totally agree with the Wall Street Journal. This is America. If I choose to give away half or all my commission, that's my business. Besides, last I checked, the real estate commission in Texas anyway says that commissions are negotiable -- not fixed. The so-called 'full-service' brokerage companies want to limit competition and run out the upstarts -- the innovators."

Becky Schilling-Leebens with Grubb & Ellis|Northco Real Estate Services in Minneapolis agrees. "To me this seems contradictory to free enterprise and America’s capitalistic system. In my opinion this is another case of the government thinking they need to protect the consumer, but in reality they are limiting the consumer’s ability to capitalize on the market by putting controls on what the market is able to offer."

-- Peter Pike