Sunday, June 25, 2006
Ind. Law - Finally, a news story about Indiana's new anti-discount real estate brokers law
Lesley Stedman Weidenbener writes today in the Louisville Courier Journal:
INDIANAPOLIS — A new state law will require Indiana real estate agents to provide a list of services that may seem like the basics to those who've bought and sold a home:What about other states? The story continues:
Answering questions, handling offers and counter-offers, and assisting with the transaction paperwork.
But critics of the law, which will take effect Saturday, say it will squeeze out an emerging choice for home sellers in some areas — one that lets clients choose and pay only for the real estate services they want.
The so-called "a la carte brokers," more common in larger cities than in smaller towns or rural areas, offer a menu of services for sellers who want to handle part but not all of the transaction themselves.
For example, a broker might charge $500 to put a home on the privately run Multiple Listing Service, which makes it readily available to thousands of real estate agents across the state and country. But the homeowner would handle showings, offers and financial details by themselves or with the help of an attorney.
The new law, pushed by the Indiana Association of Realtors, will require that broker to provide other services as well.
An agent "shouldn't just be able to charge a fee and do nothing," said Karl Berron, legislative director for the association.
But Angie Hicks, founder of Angie's List, an information service for homeowner services that expanded last week into the Louisville metro area, said the law removes competition from the real estate services market and means some sellers will have to pay for services they don't want.
In a traditional transaction, sellers pay commissions that total 6 to 7 percent of the selling price — half to their own agents and half to the buyer's agent. By using discounted services, those sellers can save thousands of dollars.
"It's really a law that's reducing consumer choice," Hicks said. "The majority of people still use traditional real estate agents. But for people who have bought and sold houses often and are equipped to handle parts of the sale, this law would be eliminating choices."
The Indiana law is not unique. Legislators in at least 10 states — including Illinois — have enacted minimum service laws, according to the Consumer Federation of America, which opposes them.More from the story:
And they are under consideration in others, despite antitrust objections from the U.S. Department of Justice.
Kentucky legislators rejected a minimum-services law.
In Central Indiana, though, discount broker HomeYeah is closing up shop because its California-based owners don't want to work in the state's new anti-competitive atmosphere, said the company's local agent, John Slimak.The story also quotes Karl Berron, legislative director for the Indiana Association of Realtors as stating the law doesn't prohibit real estate agents from providing discounted services.
HomeYeah offered a $499 Multiple Listing Service listing to sellers in addition to more expensive packages that provided additional services.
Slimak has now started a new Indianapolis business — HomeChoice — that will offer complete real estate services. He plans to charge a 1 percent commission but provide full services.
He said that's unfortunate for many of his customers, who he said have saved thousands of dollars with the multiple-listing package, for which Slimak also went to the closing and handled the title work.
"It's a shame," he said. "People who were savvy home buyers and sellers could get their deals done faster and quicker without buying full services."
Interesting. I guess we will have a better idea of what the state Real Estate Commission thinks the law means with respect to discount brokers after it goes into effect next week ...
This story today is the first news story the ILB has seen about the new law and. ironically, it is in the Indiana edition of an out-of-state paper. This spring, immediately after the session concluded, the ILB had a number of entries on this new law. Here is a quote from an ILB posting on March 19th of this year, commenting on a letter to the editor that commendably is still available from the Indianapolis Star website:
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:This was followed by several more ILB entries on HEA 1339, includng this interesting one from March 22, and this one from March 24th. See also a March 30th entry, and this one from April 8th titled "The Changing Face of Real Estate Sales."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.
Posted by Marcia Oddi on June 25, 2006 07:40 AM
Posted to Indiana Law