The Residential Real Estate Brokerage Industry: A Proposal for Reform

Abstract

KERAGE INDUSTRY 30 (1983) [hereinafter FTC REPORT]. The listing agreement contains the contractual obligations of the seller and listing broker. See infra notes 17-28 and accompanying text.The three most commonly used types of listing agreements are the open listing, the exclusive agency, and the exclusive right to sell. In an exclusive agency listing, only one broker is employed to sell the property, but the seller retains the right t o sell the property himself. In an exclusive right to sell listing, the listing broker will receive a commission regardless of who sells the property during the listing period.because it encouraged competition among the brokers and also allowed the seller to continue to make efforts to sell his own property. The open listing still is the dominant listing agreement in today's commercial market,3 but under pressure from a network of national and state trade associations4 the legal relationship between seller and broker in the residential real estate market has changed drastically.Under state regulation5 the residential real estate brokerage industry now operates within a framework designed to favor brokers at the expense of both buyers and sellers. The framework includes an "Exclusive Right T o Sell Listing"6 coupled with a "Multiple Listing Service" (MLS).' A 1983 Federal Trade Commission staff report provides:Today brokerage structures and practices are often viewed as the only possible system of brokerage. However, they have evolved over many years in response to specific problems and needs of the industry. These structures and practices were not implemented arbitrarily, nor were they imposed by an outside force. They were, for the most part, developed and instituted by the industry members themselves.* The framework of the exclusive right to sell listing and MLS is governed primarily by agency and contract law, together with regulation and licensing by a state real estate commission? The frames See FTC REPORT, supra note 1, a t 30. See infra notes 28, 216-35 and accompanying text. The principal trade association is the National Association of Realtors (NAR) and its affiliated state and local associations. See FTC REPORT, supra note 1, a t 80. Open listings presented certain problems to brokers: competition among listing brokers, competition with sellers, and duplication of effort by brokers. Exclusive listings and the MLS "solved" the problem of competition among brokers and commission reductions to induce listings. See id. a t 110. State regulation is primarily licensing laws which were originated by the NAR.See, FTC REPORT, supra note 1, a t 86.See supra note 2.' The multiple listing service (MLS) is a system whereby listings are pooled and distributed to all member brokers. It is a clearinghouse for market information. See infva notes 17-28, 172-77. 187-231, and accompanying text." FTC REPORT, supra note 1, a t 84.See Stortroen v. Beneficial Fin. Co., 736 P.2d 391, 395-96 (Colo. 1987). The duties of the real estate broker to the buyer and seller are governed by state law. T...

Ethics in real estate: agency practices in Istanbul

“…In the literature, some of the studies that investigate the ethical issues encountered in RE practices discuss unethical behaviors encountered in the RE industry and their causes (Miller, 1999;Okoruwa and Thompson, 1999;Boyle, 2000;Braswell and Poe, 1992;Allmon and Grant, 1990;Brinkmann, 2000;Dumpe, 2015), whereas some of them address the sufficiency and appropriateness of existing standards (Waples et al, 2009;Thorne LeClair and Ferrell, 2000;Brumback, 1991;Treviño and Brown, 2004;Treviño and Nelson, 2007;Valentine and Fleischman, 2004;Sims and Brinkman, 2003;Conway and Houlihan, 1992;Larsen et al, 2007) and contribute to the development of standards regarding professional ethics.…”

“…According to Braswell and Poe (1992), unethical behaviors in RE practices occur because: REAs make money only when sales take place not per case or for consultancy; both buyer's and seller's agents are often paid a percentage of the house price and there is less incentive for the buyer's agent in negotiating to lower prices for the buyer; and the seller usually lacks sales experience and professional knowledge.…”

Is the Compensation Model for Real Estate Brokers Obsolete?

“…Bartlett (1981) and Crockett (1982) point to cooperation among brokers as the source of uniform commissions. Braswell and Poe (1992) take this analysis one step further, positing that the practice of giving one broker an exclusive right to sell creates anticompetition.…”

The Coming Downsizing of Real Estate: Implications of Technology

“…In any local real estate market, information is power. This power has been controlled directly by real estate agents via the National Association of Realtors (NAR) and its affiliated local chapters, and indirectly through the Multiple Listing Services' (MLS) barriers to entry for non-NAR members (Braswell and Poe, 1992). Benjamin and Chinloy (1995) acknowledge high transaction costs of real estate brokerage.…”