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Sunday, March 19, 2006

Ind. Law - Home sellers lose with this new law

"Home sellers lose with this new law" is the title to a featured letter-to-the-editor in today's Indianapolis Star. The letter is from Patrick Woodall, senior researcher for the Consumer Federation of America in Washington, D.C. Some quotes:

At the urging of traditional real estate brokers, the Indiana legislature quickly and quietly passed a bill that would make homeownership even more expensive. House Bill 1339 requires all real estate brokers to provide "minimum services." This seemingly innocuous change is an attempt to protect brokers' 6 percent commission from market competition. Unfortunately, Gov. Mitch Daniels signed this anti-consumer bill.

The change will require real estate agents to provide a full set of services -- marketing the home, receiving offers from potential buyers, sales negotiation and handling closing procedures -- even if the homeowner doesn't want or need these advisory services. It is an attempt to prevent consumers from accessing a range of new, lower-cost real estate models. * * *

In other services, new business models using the Internet and technology brought improvements years ago -- such as in securities brokerage and travel -- but the changes are only beginning to affect the real estate industry. Rather than embracing market competition, industry leaders are attempting to use government to preserve the old model and prevent consumers from using less expensive real estate services. Similar efforts to limit competition from Internet real estate brokers drew a Justice Department antitrust lawsuit against the National Association of Realtors. And the same effort is behind the Indiana legislation.

The Antitrust Division of the Justice Department, along with consumer groups and many new real estate brokers, opposes the law. Gov. Mitch Daniels did not act in the best interests of consumers and homeowners when he signed this legislation.

The new law at issue, HEA 1339, has language beginning at the bottom of page 3 listing in detail the minimum duties the real estate licensee is to perform.

If the letter writer's analysis is correct, this means that real estate agents have now become a "protected species" in Indiana, rather than the "endangered species" predicted in this March 6th ILB entry that began:

NPR's Morning Edition had a story last Friday, March 3rd, about how "the Internet is putting pressure on the fees that [real estate] agents have become accustomed to." It speculated whether real estate agents would soon go the way of travel agents. And stock brokers.
In other words, no discount real estate brokers in Indiana.

[Note: One other thing that puzzles me about the new law is the new Sec. 25-34.1-8-7.7 added on p. 3, which provides that the attorney general and the real estate commission shall annually "enter into a memorandum of understanding to administer and enforce this article."]

Posted by Marcia Oddi on March 19, 2006 07:49 AM
Posted to General Law Related