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2007 Idaho Legislature - H0135 Proposes Real Estate Minimum Service Law
Posted by Heinrich Wiebe in Fizbomap, For Sale by Owner, News, Tips, Consumer Rights on February 18th, 2007
House Bill 135 has arrived. This is the proposed legislation we’ve said was on the way. It isn’t nearly as troubling as we had initially thought, but keep in mind there could be other tie-in proposals looming on the horizon. This bill is driven by the Idaho Association of Realtors and it chips away consumer rights of choice when it comes to obtaining real estate services while providing a liability shield for real estate agents and their brokers.
STATEMENT OF PURPOSE
By law, licensed real estate agents owe their customers and clients certain duties. This legislation clarifies that an agent be available to receive and timely present offers and counter offers. The legislation also clarifies the difference between a customer services agreement and a representation agreement.
BUSINESS REAL ESTATE BROKERAGE REPRESENTATION ACT
Amends existing law relating to the Idaho Real Estate Brokerage Representation Act to revise definitions; to revise duties to customers and clients; to provide that broker compensation or an agreement for broker compensation shall not constitute an agreement for agency representation or otherwise create an agency relationship; and to revise provisions relating to the duration of an agency relationship.
After reading the above canned summary, this bill sounds reasonable enough. But you should be cautious because the devil is in the details. To assess this proposal and share with you our thoughts, lets take a look at it one proposed change at a time.
DEFINITIONS SECTION
We agree that adding more clarification is always helpful and consumer friendly. In this case, the proposed changes make a clearer distinction between “customer service agreements” or “compensation agreement” and “representations agreements” or “contract for representation”.
Imagine a situation where you, the consumer, sign some “wordy” paperwork presented by a real estate agent. This paperwork refers to some level of real estate service to be supplied in exchange for money paid. The proposed definitions help to identify exact language to be used in the agreement so duties owed by Realtors to consumers is clearer (to Attorney’s mostly).
DUTIES TO A CUSTOMER SECTION
This portion of the bill introduces the ‘minimum service’. We interpret this section to mean that if a customer selling their home on their own (For Sale By Owner) obtains real estate services (such as marketing through the MLS), then the customer becomes obligated to have the Realtor/Broker who supplied the service be ‘available’ to ‘present’ all offers.
We want to know what it means to ‘present’ offers and what it means to be ‘available’. No definitions are provided in the statute. These obligations are so important however, that they cannot be waived. In other words, this proposed law would force Realtor’s be in the middle of the transaction anytime consumers obtain the smallest amount of Realtor service.
We found a Readers Digest article this month titled “Real Estate Ripoff” and it provides the best analogy we’ve found for this arranged policy. “It was like requiring Burger King to have waiters. Pay for waiters – or real estate agents – if you want the service, but why mandate it?”
What if a customer doesn’t want a waiter/Realtor to present offers and counter offers? What if the customer wants their offers and counter offers presented directly? Tough; it can’t be waived.
We see this as a built-in path to job security through statues. The inability of consumers to ‘opt-out’ is precisely the complaint the Department of Justice made when its Attorney’s came to town and made their position known to the Idaho Real Estate Commission.
From our position, it’s clear this bill is directed at business models that un-bundle the traditional real estate process, giving consumers more choice. The choice to buy less than the full meal Realtor deal.
The focus should be on consumers that are choosing to selling their own home, but don’t want to pay for 100% of the old school Realtor package. Why should it be forced on them? Does the Idaho Legislature believe that consumers are too dumb to manage their own real estate transactions? We don’t think so.
The net result here could be business as usual, costing consumers money while keeping new business models at bay through new laws.
The the existing cartel is preserved as long as Realtors control the data that the majority of consumers view when considering real estate for sale, and Realtors are obligated by law to present all offers generating.
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