New law prohibits real estate brokers from offering homeowners bare-bones selling services in exchange for a low fee
By Kit Wagar
The Kansas City Star, Mo.
RISMEDIA, July 14 (KRT) Missouri Gov. Matt Blunt signed legislation Tuesday that prohibits real estate brokers from offering homeowners bare-bones selling services in exchange for a low fee.
Blunt signed the legislation despite objections from the U.S. Justice Department, the Federal Trade Commission and the Consumer Federation of America, all of which called the bill anti-competitive and unnecessary.
Blunt defended his action by noting that the bill was approved 156-0 in the House and 33-0 in the Senate.
“I reviewed and my staff reviewed” the letters calling him to veto the bill, Blunt said. “Ultimately, I cared more about the unanimous opinion of the Missouri House and Senate than I do of a federal agency.”
The Missouri Realtors Association put on a full-court press to encourage Blunt to sign the legislation. The group organized members to write to the governor in support of the bill and paid more than $50,000 to a lobbyist for one month’s work to persuade Blunt to sign the bill.
That lobbyist, Gregg Hartley, now vice chairman of the Washington lobbying firm of Cassidy & Associates, has close ties to the governor’s father, U.S. Rep. Roy Blunt, a Missouri Republican. Hartley worked for Roy Blunt from 1989 to 1991 when the elder Blunt was Missouri secretary of state and later was Roy Blunt’s chief of staff after he was elected to the U.S. House.
The lobbying contract, dated June 15, paid Hartley’s firm $50,000, and $2,350 for overhead as well as expenses for one job: “to assist (the Missouri Association of Realtors) in pursuing its government affairs objectives. The nature of these objectives shall be working to ensure the enactment of HB 174.”
Sam Licklider, the association’s chief lobbyist in Missouri, said before Hartley got involved, he thought Blunt would veto the bill.
“I think the governor’s staff was overly impressed by the Department of Justice letterhead” on the letter asking Blunt to veto the bill, Licklider said.
Calls to Hartley and Aimee Steel, Cassidy & Associates’ spokeswoman, were not returned.
The bill was sponsored by Rep. Dennis Wood, a Kimberling City Republican who has been a Realtor for more than 25 years. The bill requires brokers and their agents to handle offers and counteroffers, to help clients negotiate and develop offers, and to be available to answer questions relating to any contingency involving the sale of property.
Blunt said he concluded the bill was worthwhile.
“These are reasonable expectations that any customer should have of a real estate broker in an exclusive broker’s agreement,” Blunt said. “Making these requirements law ensures the protection of those buying and selling a home.”
But consumer groups complained that the bill undercut the ability of discount real estate brokers who provide only certain services to home sellers in exchange for a small fee. An emerging industry trend is brokers who place homes on the region’s brokerage industry’s multiple-listing service for flat fees, then leave it to the sellers to negotiate prices and show off their properties.
“Some innovative real estate brokers are poised to offer consumers new combinations of service, often at reduced prices,” Stephen Brobeck, executive director of the Consumer Federation of America, wrote to Blunt.
The Justice Department and FTC, in a May 23 letter, asked Blunt to veto the bill because it would reduce competition among real estate professionals, “causing some home sellers to pay thousands of dollars more in commissions.”
The letter said the bill would raise the cost to people who would rather do most of the work themselves. It also would raise the cost to people who want to use full-service brokers, since competition from discount brokers holds down fees charged by full-service operations, the letter said.
“Furthermore, the portion of House Bill 174 with which we are concerned does not address any demonstrated consumer harm,” the letter said.
The Justice Department and FTC letter prompted the hiring of Hartley to lobby Blunt to sign the bill, Licklider said. He called the letter an unwarranted interference by the federal government in the affairs of a sovereign state.
“We hired him to address these attacks by the FTC and the Justice Department, to get them back on the reservation,” Licklider said. “They aren’t going to pay attention to a little Realtors association in Missouri. We needed someone inside the Beltway who knows the staffs and knows the people and knows how to get things done.”
Licklider credited Hartley with persuading Sens. Kit Bond and Jim Talent to send a letter to the Justice Department and the FTC, criticizing the agencies for requesting a veto. The senators called the agencies’ request an “inappropriate and an unwanted intrusion into the state legislative process.”
Licklider called the bill a consumer protection measure — an attempt to stop brokers from tying up customers’ properties in exclusive listings for 90 or 180 days, then do little work to sell the tracts.
The FTC, the Justice Department and consumer groups said that had not been a significant problem. Licklider agreed but said it was a big problem if it happened to you. The new law makes failure to provide services a licensing violation, and that gets brokers’ attention, he said.
The governor’s office received 275 letters and e-mail messages from Realtors and other constituents in support of the bill and nine opposing it, said spokesman Spence Jackson.
In the Kansas City area, discount real estate brokerages are virtually unheard of. But some full-service brokerages offer discounted prices in exchange for more limited marketing efforts.
Larry Kennett, office manager for Help-U-Sell of Johnson County, said the law should not affect his business, which operates in both Kansas and Missouri, because his agents already provide the services the law requires. The problem with discount brokerages, he said, is that homeowners often expect the discount brokers to do the same work as full-service brokers, just for a much lower price. Then they are shocked when they are left to complete a complicated transaction on their own.
“If consumers are aware of what they are getting, they should be able to select whatever services they want,” Kennett said. “But the reality is that it puts the seller at a disadvantage because the buyer’s agents don’t want to play that game.”
Copyright ? 2005, The Kansas City Star, Mo.
Distributed by Knight Ridder/Tribune Business News.
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