“Consumer Protection” or “Industry Protectionism”

Brokers in Texas are facing new restrictions on the way they provide real estate services. No longer are limited service and MLS entry-only brokers able to offer an a la carte menu of services to consumers without restriction.

Because of the efforts of traditional Realtors who control the Texas Real Estate Commission and Texas Association of Realtors, legislators were convinced that the public needed "protection" in the form of stricter real estate requirements for real estate brokers.

Senate Bill 810 went into effect September 1, 2005 requiring real estate brokers to, among other things, present real estate offers directly to their customers. No longer do consumers have the choice of paying a real estate broker less for fewer services. Whether or not Texan home sellers want a broker to handle their real estate offer for them or not, they must now agree to allow the broker to present the offer (and, of course, pay for that extra service accordingly).

While the introduction of the new law was couched with the term "consumer protection" by it’s proponents, the obvious intent of these types of measures is protection of the interests of big brokers and their right to a traditional real estate commission of 5-7%. Limited service companies have made terrifc gains in the market over the past several years at the expense of traditional brokers.

So much so, in fact, that Realtor Associations in several states have called for and pushed through legislation on the unwitting public that requires them to pay for additional services they may not want or need. Aaron Farmer of Texas Discount Realty and Jack McLemore of BrokerDirectMLSTexas have both already raised their fees in response to the requirements of the new law.

It doesn’t seem like the consumer wins (or gets protected) when rates for real estate services go up in response to a new law and no benefit is derived.

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