Homeowner's Blog

Homeowners Hail Repeal of Law Prohibiting Real Estate Commission Rebates

The American Homeowners Grassroots Alliance hailed the repeal of New Jersey's state law prohibiting real estate brokers and agents from providing commission rebates to home buyers. State real estate associations have also managed to pass similar laws in other states in recent years, despite the opposition of the American Homeowners Grassroots Alliance, the U.S. Department of Justice, the Federal Trade Commission, and many other consumer advocacy organizations. The legislation became effective with Governor Jon Corzine's signature of the legislation (A-373 and S-139) on January 17, 2010.

The legislation will allow New Jersey real estate consumers to receive real estate commission rebates from real estate brokers and/or agents. As mortgage lending standards have tightened, leading to higher down payment requirements, those rebates have become increasingly important in facilitating home sales. Commission rebates, which can amount to as much as 2% of a home's selling price, may enable a home sale that would otherwise not be possible, especially for low and moderate income buyers. As a result, real estate commission rebates are becoming increasingly popular in states where real estate trade groups haven't passed similar protectionist legislation.

"We believe that the repeal of this bill will increase the pool of buyers and help to slow future declines in New Jersey home values, " said AHGA President Bruce Hahn. It's particularly helpful in states like New Jersey where the economy is tough and many buyers have difficulty scraping up a down payment. "We're delighted at this positive step, and hope it signals a trend towards removing similar barriers to competition in other states," Hahn added.

Time For Congress To Act

The Chairman of the U.S. Senate Judiciary Antitrust Subcommittee on July 6 urged the Justice Department to investigate possible anti-competitive practices in the wireless industry. It is certainly appropriate for the DoJ to scrutinize the state of competition in industries that have become more concentrated, and to take action if violations of antitrust laws have occurred. Increased concentration and practices in the pharmaceutical, airlines, agriculture and other sectors are also being reviewed by DoJ. We are also seeing more concentration in other sectors of the economy as well. DoJ needs to look at all of them as part of its ongoing mission and take appropriate action if it finds antitrust violations.

In the meantime there are other problems in the competition/antitrust arena that are already fully evolved and defined, and which clearly will require a federal legislative solution. Both the DoJ and the FTC have done a commendable job in recent years in overturning many state real estate regulations and industry practices that force consumers to pay higher real estate sales commissions. These practices have been well documented in scathing reviews by 60 Minutes and hundreds of other electronic and print media. Despite DoJ's and FTC's effective work, some of those anticompetitive practices have become embodied in state laws, and neither DoJ nor FTC currently have the power to overturn them.



Continue reading Time For Congress To Act.