A new state law backed by Realtors that critics say stifles cut-rate competition already has prompted a discount brokerage, California-based HomeYeah!, to shutter its operations here.
The law, which went into effect July 1, spells out minimum services all licensed residential real estate brokers must offer, regardless of whether customers want to pay for the services.
Realtors, who are members of the National Association of Realtors, say the law helps ensure brokers provide clients the help they need to navigate the complex home-buying process. But critics say Realtors are trying to suppress competition to protect the 7-percent commission they typically collect on home sales.
HomeYeah! and other low-cost brokers list homes on their Web sites and on the local multiplelisting service, or MLS, for a flat fee, generally about $500. MLS listings, which are managed by local boards of Realtors, also are posted on national site Realtor.com.
But effective July 1, all brokers had to be available to handle offers and ounteroffers, to assist with paperwork, and to answer questions. That put HomeYeah’s $499 option, which provided sellers a six-month listing on its Web site and the local MLS, outside the law’s boundaries.
Another Home-Yeah! option—putting home listings on the company Web site but not the MLS—also didn’t comply. “The company didn’t want to participate in Indiana since the law destroyed two of its models,” said John Slimak, former president of HomeYeah!’s Midwest division, which was based in Indianapolis. HomeYeah!, which was launched in Indiana in 1999, typically carried 60 to 90 listings at a time.
The legislation's sponsor, Rep. Tim Harris and the Realtors Association lobbyist, Karl Berron, demonstrated to Donhardt just how shameless they are in defending the new industry law. They continue to falsely assert that the intent of the legislation is to protect consumers despite accusations from the U.S. justice department that such laws are purely anti-competitive. “What we’re not trying to do is put anyone out of business,” Harris told Donhardt. But she notes his own self-interest in the new law, noting that Harris "has been in the real estate business 12 years and works as a title insurance agent in Grant County."
Berron tells Donhardt that "he’s surprised by what he considers the unwarranted negative reaction to the law here and elsewhere." “It’s a licensing issue, not a marketing issue,” he said. “It’s just patently not true that this business model or that model is being eliminated. There will still be a wide range of services around.”
Shannon Riegle, a former HomeYeah customer thinks differently. “It’s frustrating. Why can’t we just choose what we want ourselves? Competition is supposed to be there for a reason.”
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