Entry by Jennifer Allan

Anti-Trust Issues with Discussing the ACRE® Model

Okay, here goes my first post!

On August 1st, I'm holding a free teleseminar (NO, this is not an infomercial!) on the topic of "Alternative Business Models." Mollie has agreed to be one of my guests, along with ACRE® Margaret Rome. The grand plan is to discuss four different real estate business models, with ACRE® being one, Flat Fee being another, Discount Brokerage and, for lack of a better term, "Luxury Brokerage." (That's not at all what Margaret is going to talk about, but I can't think of an alternative at the moment).

However, I've been warned by a CRS instructor friend that ANY discussion of business modeling, even without using real numbers, among a group of real estate agents is asking for trouble with the anti-trust police. Here's what she said:

 

"Anti-trust is not just about the prices we charge, it is also about the policies and models. I think you may be treading on some thin ice with various presenters discussing their brokerage models. It is such a touchy subject and you have no control over what comes out of someone’s mouth regardless of how well you versed them upfront. I’m not sure what to tell you other than the fact that it scares me.

If you really want to do this, I would talk with your state association attorney or your broker’s attorney or someone who really understands anti-trust in regard to real estate. Good luck and let me know what you decide."

Mollie suggested I ask my new ACRE® friends for their thoughts. I don't typically freak out about such things, but I don't want to do anything stupid, either.

Wouldja' mind tossing your pennies my way?

Thanks!

Jennifer

18 Comments

Well, Jennifer, this may be your FIRST post, but it's an OUTSTANDING one! Congratulations on your forward thinking approach as well!!!

I certainly agree (just in case) that it would be a good idea to check with your board's attorney or your brokerage's attorney to clarify what could or could not be addressed in such a seminar. I should think that as long as discussions stay along the lines of "this is how I work with my clients and customers" and not treading anywhere near "I think everyone should do what I do, or charge the way I do", I fail to see how antitrust would be involved. No offense to your friend, but two things certainly do cross my mind:

  • Some people fear ANY mention of what or how we charge as off limits. Discussion of fees has never been a violation of antitrust ... conspiring to fix prices at the top of the list. Certainly all of your "guests" are well aware of that, and
  • Many, perhaps even MOST, in the "rank & file" real estate community are terrified of any discussions that don't follow the "accepted norm" for real estate brokerage. They feel threatened by it. It's not enough that everyone doesn't practice real estate in the same way, somehow they're not even supposed to discuss any alternatives
  • Frankly, it seems to me that an open dialogue (which is what you are talking about doing) that examines a variety of perspectives on how real estate CAN BE PRACTICED is a good thing for both the consumer and for the industry. Consumers benefit by having choice. The industry benefits BECAUSE the consumer benefits. Here's some information on anti-trust & competition from the Department of Justice website. I should think that, rather than being a violation of anti-trust, such activity would be heralded as an antithesis of anti-trust.

    Well said JudiB!

    What I said to Jennifer was this:

    "If you really want to know what I think, it's hogwash. Anti-Trust has been brought up a million times to try to keep the status quo going. I can't speak for others but I can tell you that the consulting model is all about giving the consumer lots of choices which is the opposite of collusion, and isn't that what anti-trust concerns are about? Why in the world would talking about different models in real estate be bad? Why is it a "touchy subject"? Because it's not the way it has always been done?

    I guess I really don't understand what this instructor's concern is. Knowledge is a good thing and it seems to me that the only "threat" in discussing different models and methodologies is to those who are invested in the status quo. I never discuss what I charge with other agents. In fact, I'm a stickler for doing your own homework and setting your own hourly worth and fee packages. Our training in ACRE is ALWAYS to set your own fees - so I just don't know what the concern is about."

    ACREs, please chime in! I know some of you are brokers who have dealt with this type of thing and I told Jennifer that this was a good place to get some thoughts on the subject...

    Mollie

    Jennifer -

    Boy, you already ruffled some feathers and you haven't even said anything!

    As I read your post about the CRS instructor's concerns, I too thought along the same lines as Mollie - Hogwash!

    How can an open discussion about real estate service models be an anti-trust issue? I don't think your goal is to have participants unite as one voice and one model. (Even if it were your goal, I think you'd miss it by a mile or two!)

    For heaven sakes, consider the number of articles we see online discussing different service models... Are those articles anti-trust, too?

    As far as fees go, I don't even discuss my fees within my office. I talk about the "model" and my "packages" but not my fees - except of course with my broker.

    I just can't understand why she is so concerned about this - unless (as Mollie said) she is afraid of upsetting the status quo!

    That's my couple of pennies to you...

    Betty

    Hi Jennifer,

    I love the idea of your teleseminar and your domain name sellwithsoul! Welcome and Best of luck to you!

    Sorry, this is a long one...
    I thought this might be a semi-relevant topic to bring up when discussing business models and adherence to the tried and true. You may have seen this interesting piece of news last month regarding a RESPA violation for calling out a fee as an individual line item ($149 administrative brokerage fee). www.realtor.org/letterlw.nsf/pages/0409busby.

    Here's a summary of what was suggested to avoid violation: "In the meantime, NAR counsel advises: “In light of this decision, brokers should review how they characterize their compensation. Placing separate labels on what is all compensation to the brokerage firm exposes the firm to the same claims asserted against the defendant here. It allows the conclusion that each separately labeled charge represents a fee for a separate service. Likewise, disclosing separate components of the broker’s compensation in different parts of the contract with the consumer or on different lines of the settlement statements creates risk. Disclosure of the brokerage firm’s compensation should clearly indicate that both the commission-based component and the flat fee component represent payment for services provided by the brokerage. These combined amounts should be disclosed in the 700 section of the HUD-1 as the broker’s compensation. Finally, do not create the impression that any particular fee is for a separate service if that is not the case.”"

    I'm trying to be transparent with my fees to clients; but, am I the only one who gets confused and a little frustrated with 1. how entrenched the belief of consumers that we're trying to pull a fast one on them? 2. after all the mismanagement of government & banks, consumers want transparency but then we have to contend with potential anti-trust and RESPA violations when providing transparency! 3.Does it not seem that NAR is saying don't try anything different because it is too risky and you may end up like the defendent in this case?

    I understand that laws, codes of conduct, and licensing rules are important and necessary. I just don't understand when rules impede or slow progressive thought and action - especially when the consumer benefits!

    Yesterday I even had another agent point out to me that I am in violation for having ACRE printed on my business card and flyers. Here in Arizona, the term "acre," alone or modified may not be used unless referring to an area of land representing 43,560 sq.ft. Needless to say, I checked and it's true but I just spelled out Accredited Consultant in Real Estate after ACRE.

    Go figure!!!

    Jennifer: what a great idea. As a new ACRE, not having the time to truly focus a new business model, but giving it a lot of thought, I'd love this time of conference. How such a discussion business models could be considered remotely treading on "anti-trust" escapes me. I guess if the anti-trust police show up, we'll ask them.

    Geez! just proofread my previous message. Should have shut out the lights and called it a night instead of commenting on Jennifer's great idea. It's 12:30 PDT here, and I just spent more than 7 hours at our city council meeting deliberating a gas tax (which failed). Hope you'll pardon my babble.

    Stacy, you point out something important: even though ACRE® is registered, the registration is for the design and colors - obviously we cannot register the word acre.

    However, it's VERY important that you include the Register symbol whenever you're referring to our designation. Not only does it distinguish ACRE® from an acre, but by using the ®, it stands out, and invites good questions, especially on a business card.

    In most cards and advertising, I do spell it out:

    Accredited Consultant in Real Estate (ACRE®).

    If I'm writing an article or blogging, I will usually spell it out the first time: Accredited Consultant in Real Estate (ACRE®) and then just use ACRE®. Even in Hot off the Wire and the ACRE Alert I always take pains to use the register symbol. The only place I don't care is on this Exchange.

    Mollie

    Thanks for all the comments! I didn't realize they were here - can anyone tell me how to change my settings to receive notifications of comments & posts?

    I'll return soon to share some more thoughts on the anti-trust stuff... but right now I need some COFFEE.

    My bad Jennifer. When people pass the ACRE Exam, they are supposed to be automatically subscribed to the email alerts. You were not, but now are.

    If anyone else is not receiving email alerts and wants to, please respond here and let us know.

    Okay, I'll buy into the Hogwash attitude. I read the link posted by Judi and it seems almost to encourage discussion of Alternative Business Models, if I'm reading it right.

    Maybe I'm just using my brain more than I should (tee hee), but how can a discussion of a business model possibly be interpreted as price-fixing? C'mon!!!!!

    I think I shall soon be frustrated along with all of y'all as to the ridiculous hostility toward the consulting model. As I'll discuss at the seminar on August 1st, I owned a discount brokerage at one point and was stunned at the resistence we got from other agents. One very prominent broker called me up and advised me to stop leaving my business cards in their houses I showed or she "would take further action against me."

    Actually, I was kinda flattered.

    What mystifies me still is that brokerages (even the "big box" franchises) insist on holding on to the notion that there is only one way to do real estate. I remember, though, years ago when Coldwell Banker made an attempt to offer discount / limited service with Blue Edge Realty. My understanding was they wanted to test market it in a few areas to see "how it played". Some offices were opened in other areas of Illinois, but to my knowledge, none were opened in the Chicagoland area.

    What I found interesting about that was that while I was at Coldwell Banker years ago (and I'm not indighting ALL of CB here...but expressing what happened regularly at the CB office I worked in) agents were strong-armed into NOT negotiating commissions and referral fees, etc. If they did, any shortfall off the company's "minimum" commission would be taken from the agent's side of the commission. After I left CB, I remember a friend (who's still there) telling me that she could not accept anythig less than a 35% referral fee on outgoing referrals...otherwise the company would take the difference out of her share of the commission. So the "corporate" CB was telling agents "NO, don't date offer any alternatives to the consumer, stay steadfast to the hightest commissions and referral fees you can" while BEHIND THE SCENES they CREATING a hugely "limited" model to directly compete with those agents! In what little I'm able to see about it online now, Blue Edge advertised 2% commissions. However, my impression is that would not include MLS, would not include paying a coop, etc.

    People always fear what they don't understand. And a natural reaction to fear is getting defensive (often over-reacting). All I can say is "REMEMBER BUYER AGENCY!" Anyone who was in real estate in the early/mid 90's KNOWS the reaction that 99% of the brokers/agents out there had with the more "progressive" in our industry who were beginning to offer buyer agency. It wasn't pretty. The resistance we experience is the very same thing. If we're lucky, time and effort will generate much the same result.

    Hi Jennifer,

    At the request of Joeanne Fossland a year or so ago, I was in AZ at their State Convention and spoke live to the Womens Council of Realtors along the same lines as what you are doing. I discussed ACRE, their was a discount broker, an auction broker, and a traditional broker.

    Anti trust is a federal Law, if you go to http://www.Realtor.org and type in "anti trust" you will get the information you seek in writing, straight from the horses mouth

    A lot of people are afraid to discuss things that are perfectly legal to discuss. Anti trust is about collusion, whereby agents get together and form a plan ie: traditional comm. agents to not show properties of other brokers ie: discount brokers, or agree not to charge less than a certain amount so that sellers can't negotiate commissions.

    As long as your teleseminar is not discussing specific commission rates or flat fee broker fees, etc you'll be fine. You should have it be a muted call where by the person speaking understands they can not answer any "money" questions, nor advise that everyone should only adapt "their business model". If they start delving into that gray area, you can mute them and again state to all that you are not allowed to discuss that topic.

    Who are you going to use to do your teleseminar? Make sure they have the capability to mute all, or mute one person only from your end. It works well if you have two people in charge... one to focus only on the speakers, the other running the back end.


    Our very own Tom Pickering could give further advice to this subject as well.

    Hope this helps!!

    Here is a link to an article on the subject of anti-trust and business models... I'm sure there are tons of these, but this is the first one that came up on my search! http://bay.flrealtor.net/doc/Antitrust%20article%2010.13.05.doc

    It confuses me. Basically, it says that if anyone on the planet (as long as they're a potential competitor of yours, I guess) brings up the topic of real estate business models, you should either request that the conversation halt or leave the room. Why? Because such discussion could be interpreted as an attempt to blackball the model.

    Hmmmmmmm.

    But what if the conversation is simply a conversation about the model without any criticism, implied or otherwise? This seems bizarre to me - and way overkill.

    What I'm wondering is this... is it okay (according to the letter of the law) to TEACH a business model as long as you're the only one talking??? But if you invite another voice into the conversation, it suddenly becomes an anti-trust issue???

    Paula - that seems to be a very reasonable approach. I really appreciate your thoughts.

    In April, I did a teleseminar on commission negotiation (it was fabulous, BTW - let me know if you'd like the link) with five speakers. That was my first brush with this issue of teaching about strategies or philosophies without crossing THAT LINE. It seems to be a bit of a gray area when it comes to formally teaching or speaking on the topic... obviously trainers, brokers and gurus do it every day...

    We have the same issue with the Do Not Call list, again, the government steps in to protect the consumer, lol.

    There are ways to get around any law, not that I want to do that, I want to be perfectly legal. The DNC list says that people can call without buying the expensive and updated list from Uncle Sam IF they are doing a survey, or if it is for a charity, or someone you have done business with in the last year.

    Sooooo.... I called fsbo's and expired with my survey approach. I'm not calling to try to get you to list your house with me, I'm conducting a brief survey to find out what you were pleased or unhappy about with your last experience. Would you mind giving me your thoughts on that? People LOVE it when you ask for their opinion, and most often the subject would come up (from their end of course) as to whether I'd be interested in looking at their house and give my .02 on it.

    I guess what I'm trying to say, is not to worry yourself to the brink of insanity over this teleseminar. Don't listen to your CRS instructor, in fact I would not even listen to my broker in charge as most often I find they know less than I do.

    Go to http://www.Realtor.org and read about anti-trust. You are doing a teleseminar, people from different states, only sharing opinions on different business models. As long as you don't mention particular fees or stray into the gray zone of discount brokerage vs traditional commissions vs Consulting and which is best, you'll be fine.

    btw - I LOVE your web site! Especially the "Green Bean" section, lol! But of course you saw that coming ;-)

    Paula Bean
    Orlando, FL

    Jennifer -

    I just read the article you linked above -

    I can see where you are coming from on this but I think maybe you are over-thinking the whole thing. It's not as if you, your panelists or your audience a getting together in conspiracy. The purpose is simply providing a platform to share information about different service models. You are providing an educational service, a forum for exchanging ideas with agents from across the country.

    (Now, if you end-up proclaiming one model better than another and order it's adoption - that would be a different story altogether ;o)

    Paula made some excellent suggestions about the actually mechanics of the seminar - the ability to mute and unmute.

    It will be fine, all will go great!

    Betty

    Betty - I have a habit of NOT worrying about such things, so when something like this comes up, I question my own judgment... but I just gotta go with my gut on this one.

    However, what's interesting, as an aside, is that in the simple action of discussing a preferred business model (which, if you practice one, obviously you "prefer" it), it's easy to criticize other models. When I was writing up my portion of the August 1st discussion, I found myself wanting to explain why "my" business model worked "better" than the one I came from, which really IS part of the big picture. After all, if you've implemented an alternative model, obviously, you think there was something in the traditional model that needs improvement.

    We'll just have to be careful about how we phrase things...

    The anti-trust prohibition is a good one to be very careful around and I think most agents either don't understand or don't care about the restrictions we must live with regarding the discussion of compensation.

    What we are not supposed to do is discuss with other agents outside of our own brokerage what we charge. What's WHAT we charge, not HOW we charge.

    With all agents outside of your own brokerage:

    1-It is OK to say "I charge a commission" or "I charge hourly".

    2-It is NOT OK to say "I charge X percent commission" or "I charge X number of dollars per hour". It is also not ok to say "I charge a flat rate of X dollars per transaction."

    The CRS instructor was confused to say that you could not discuss the model at all. She would have been correct in stating that you cannot discuss the specifics on how MUCH you charge within each model.

    This page contains a single entry by Jennifer Allan published on July 14, 2009 6:32 PM.

    How do I calculate my hourly rate? was the previous entry in this blog.

    Any Introverts in the Crowd? is the next entry in this blog.

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