With the recent talk in AR about discussing pricing and the confusion about what the law determines is antitrust practices, I thought I would make a short post to point you to the NAR's Field Guide To Antitrust and specifically some information that is useful for any business, whether real estate related or not...
4 Antitrust Traps to Avoid - Term/Price Fixing; Territorial Assignments; Boycotts; Association Meetings -- and how to avoid. [Side question: Could AR fall under the Association Meetings criteria?]
6 Simple Antitrust Prevention Steps - "Compliance with antitrust laws doesn't involve a lot of expense and rigorous documentation. It does require that you and your company's salespeople have a clear understanding of the law, a sensitivity to potential problem areas, and a consistent commitment to avoiding circumstance that might imply violations."
Can you Trust Yourself? - Simple test for Realtors (or anyone else) to determine how well you know the law.
FTC: Promoting Competition,Protecting Consumers: A Plain English Guide to Antitrust Laws. [Section: Illegal Business Practices]
NOTE: See "Additional Thoughts" on avoiding antitrust risks in the comments section (click on Comments).
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5. Association meetings. Associations are groups of competitors who come together to promote their common business interests. As such, they are vulnerable to allegations that agreements by members to use identical business practices are illegal conspiracies.
Avoid problems by: Remaining alert to discussions at meetings relating to commission rates, pricing structures, listing policies, or marketing practices of other brokers
This makes it sound like it could be trouble if we all agree on a way of doing things. I guess that's a good reason to always have some dissenting opinions.
Bryant, thanks for your comments, I'm doing well through very busy on the home front.
Tim, thanks for commenting.
Additional Thoughts On Avoiding Antitrust Risks:
I believe the issue is not just having a discussion in which we have dissenting opinions, but that we really should not be having discussions at all involving pricing (i.e., commissions, service fees) specifics. Just talking about pricing in a group, even with opposing points of few can still create peer pressure and encourage a "herding" of individuals towards leading proponents of specified pricing.
I'm very thankful for the real estate training in our state of NJ, especially our state GRI program that was extremely clear and aggressive in instilling the importance of avoiding even the resemblance of an antitrust situation.
What I have carried away from that training is that you don't talk about pricing (commissions) in any way, pro or con, with other peers outside your agency (company) office. This is because of the strong federal antitrust laws that were established, based on experiences in prior years, for the protection of consumers. And we are all consumers in one way or another.
In AR, I have enjoyed reading and learning about what others are doing, how and why they price their services. However, according to antitrust laws, it can easily be construed to be illegal -- not because most people involved in those discussions have bad intentions, but because abuse and miscommunication can too easily develop from it. At the least, it can be used to telegraph current or "standard" rates to others and allow the group to coalesce around specified pricing (consciously or subconsciously); at worst, it enables out-right price fixing.
We should be focusing on developing pricing that we believe will allow us, as individuals, to make what we consider a fair profit based on the value of our services and the costs involved with creating and providing those services. The market will take care of the rest as it perceives and realizes the benefits of those services in relation to those offered by the competition.
I try to provide a quality, value-added service which, regardless of what others are charging, results in less risks, minimizes overall costs and enables higher revenue for the client.
Good post Lawrence.
Short answer; it's never OK to talk about fees or competitors outside your company.
when in doubt................DON'T!
Appropriate the validation word is "Persimmon"; green persimmon will pucker your mouth, an antitrust suit will pucker you all over ;-)
Lawrence,
Excellent post---I plan to go back and bookmark those links you posted.
Jim, thanks. Your comments are an excellent bottomlining of what I was attempting to get across.
Diane, thank you for your comment and hope the links will be useful for you. Let us know if you come across any others that you think are worthwhile.
Tim, thanks for the suggestion... for now I added a note referring to my "additional thoughts" in the comments section.
Christy... thank you and Good Luck!