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It’s critical to remember that violations of antitrust laws do not require the plaintiff to prove intent. Moreover, the agreement element necessary for an antitrust violation does not require that the agreement to cooperate be documented in any way – be it written or oral. All that is required as proof of cooperation is the promotion of an idea by one competitor and subsequent action by other competitors.
An innocent discussion on social media between brokers – which may casually reference commission rates, or their firm’s unique services or even their opinions about other industry members – can turn into an illegal act quite quickly. If antitrust regulators or a plaintiff’s attorney can show that one broker promoted anti-competitive thought that brought about an action from a competitor, they prove a violation. In fact, price-fixing and other antitrust conspiracies are rarely proven by direct evidence of an agreement to cooperate. Rather, proof is usually drawn from inference from actions.
To avoid antitrust vulnerability, go beyond the obvious precaution of abstaining from discussing commission rates and fees with other brokers.
For example, more often than not, clients push back on commission percentage rates when listing a property. A broker or agent may think that responses like the following will convince their seller that the percentage rate is sound:
- “This is the industry standard that every other firm charges.”
- “Your house will be more desirable to buyer-brokers if the commission is X%.”
But, these are actually inferences of a conspiracy to cooperate and may amount to a violation of the law.
Brokers and salespersons must learn to explain and defend rates and other competitive firm business decisions in terms that are consistent with competition. If questioned on a commission rate, a real estate professional should point out the value-add by emphasizing the services the client will receive in exchange for the fee charge. The agent should emphasize how these services will most likely lead to a sale at a fair price quickly. A seller’s dream of a quick and painless transaction can save them much more than the commission.
Along with well-crafted firm policies, real estate professionals can minimize their exposure to antitrust liability through common sense. Focus on the value-add of your services and firm – instead of what competitors are or are not doing.
Lastly, when it comes to discussing the compensation component of a listing, adhere to the adage “less is more,” and focus on closing the deal.