One of the most fundamental decisions that any business must make is establishing the price it will charge for its products or services. The Sherman Act was created because businesses were “colluding†while determining what prices to charge for their products and services.
Real estate brokerage firms are no different than any other type of business. Each must establish the fee it will charge for professional services rendered to clients. However, antitrust sensitivity in the real estate arena is high as it involves housing issues which the government, at all levels, looks on with constant scrutiny.
Although real estate brokers vigorously compete in the marketplace, they differ greatly than other businesses. They also openly cooperate with one another as subagents, buyers’ agents or even as non-agent "transaction brokers" or "facilitators," to identify a ready, willing and able buyer. This dual tradition of competition and cooperation presents opportunities for antitrust misconduct almost on a daily basis. This means that real estate brokerages and professionals are under a microscope, and any anticompetitive conduct is likely to be detected and prosecuted.
Price fixing can be in any form, other than commission rates, such as conspiracies to fix the length of a listing, the type of listing accepted (exclusive right to sell, exclusive agency or open), or the formula upon which compensation will be based (flat fee, percentage of the sales price, or a variable percentage depending upon the sales price) also may be per se illegal. It can also involve not only the prices any firm charges customers or clients, but also the prices it pays for goods and services such as fixing compensation to a cooperative broker for bring in a ready, willing and able purchaser or tenant.
I believe that the policy of NAR is that real estate professionals should never discuss or re-veal their intentions concerning fees or other competitive business activities with or to competitors.
NAR states; “Real estate professionals should never discuss or reveal their intentions concerning fees or other competitive business activities with or to competitors. Such actions will “taint,†not only the subsequent decisions made by the broker who raised the subject but also the decisions of other competitors to whom the discussions or announcements were directed.â€
Every business should a written policy on how it determines product/service pricing. The real estate broker should also have and more specifically the professional services rendered to a client are to: (1) establish the fees unilaterally without consultation or discussion with persons affiliated with any other competing firm (2) ensure that when the company’s brokers or salespeople discuss fees with actual or potential clients (not competitors), they use words that clearly convey to the listener the fact that the company does, in fact, price its services independently.
On a side note, we all read about anti-trust cases in the news. It is my observation that the outcome of these cases does not necessarily depend upon what actually happened at the time an alleged violation occurred but rather what the judge or a jury, believed took place. As a result, antitrust compliance programs are concerned as much with avoiding conduct that creates the appearance of a conspiracy in restraint of trade, as with conduct that actually constitutes such a conspiracy.
