There's a reason Texas' favorite story is the Alamo. It's the shrine of Texas liberty where 182 Texans fought for 13 days against an army of thousands on the road to independence from Mexico. Texans don't like the federal government much more now than they did then, so it's no surprise that the Texas Association of Realtors didn't like the Texas Real Estate Commission being urged by the FTC and DOJ to back off its limited service rules, which were under review and about to be voted into law. Here's why.

In a thirteen-page joint letter addressed to the general counsel of the Texas Real Estate Commission (TREC) Loretta R. DeHay, the Federal Trade Commission (FTC) and Department of Justice (DOJ) outlined their positions on the proposed rule changes the state commission adopted "concerning a real estate broker's responsibilities." The letter urged TREC to reject a "proposed regulation that would change current rules by imposing new restrictions on the ability of Texas real estate professionals to offer flexibility (fee-for-service, MLS-entry-only) in brokerage services."

The agencies "expressed concern that the proposed regulation, that they feel, would not only cause Texas consumers to pay more for real estate services, but also would reduce consumer choice by restricting the ability of real estate brokers to provide services tailored to customer needs."

"Currently, Texas real estate brokers can offer the level of service that a customer wants and needs. If the Commission accepts the proposed regulation, customers will be forced to purchase additional services that they may not want or need," said a joint statement released by the FTC and DOJ.

"Limited-service brokers are growing rapidly in Texas, and across the country, because they provide greater choice and can save consumers thousands of dollars on a single home sale," said R. Hewitt Pate, Assistant Attorney General in charge of the Department of Justice's Antitrust Division. "The proposed regulation would restrict the beneficial competition created by these limited-service brokers, and the Texas Real Estate Commission should reject it."

Explains the DOJ and FTC, "In Texas, real estate services are offered by limited-service brokers and full-service brokers who compete against one another. Full-service brokers charge consumers a single price for a bundle of individual real estate services and limited-service brokers offer consumers the option to pick and choose from a menu of different real estate services according to each respective consumer's individual needs. For example, a seller can decide just to purchase multi-list services from a broker and to represent himself, or herself, in negotiating with buyers. Under the proposed new regulation, limited-service brokers would be required to bundle together certain of their service offerings into a mandatory package, and would no longer be able to offer services separately. In this example, the seller would be required by the proposed regulation to purchase representation and negotiation services from the broker in addition to the multi-list service. As a result, customers would have fewer choices and pay more for their real estate needs if the regulation is passed."

"The Commission is urging the Texas Real Estate Commission to reject the proposed rule, which would restrict the ability of limited-service real estate brokers to respond to the demands of Texas consumers," said FTC Chairman Deborah Platt Majoras. "The likely result would be higher prices and fewer options for the state's consumers, with no offsetting benefits."

Remember the Alamo! Get ready for the proverbial line drawn in the sand.

The Texas Association of REALTORS® (TAR) says it supports the adoption of the proposed minimum-services rule "because it would help ease confusion in real estate transactions and provide true consumer protections." Reports of buyer's agents doing seller's agents' duties without being paid because sellers were confused, have convinced the organization that minimum service needs to regulated in order to better protect consumers (not to mention buyer's agents).

In a strongly worded release, TAR says it believes "both the content and timing of the letter is suspect."

"Clearly, the Federal Trade Commission does not understand this consumer-protection issue in Texas," said Bill Miller, TAR spokesman. "The TREC rule clarification would not require real estate agents to put together a package of services, nor would it dictate what they can charge. It simply protects Texans who enter into the biggest transaction of their lives."

Miller went on to make these points:

• The FTC has monitored TREC's activity on this issue for two years. They have had numerous opportunities to comment but have, for some reason, chosen to wait until the eve of the meeting at which TREC is expected to adopt the rule. They have allowed the commission to spend two years studying this issue, knowing what the commission is reviewing, and chose to be silent until now. They had the opportunity to make comments to the Texas Attorney General when TREC asked for an opinion, and they chose to make no comments to the AG. This is simply a federal agency trying to dictate to a state government what the state government should or should not do. It goes against all principles of federalism.

• The letter is simply a political statement by some staff at the FTC. It ignores current Texas law and clearly demonstrates unfamiliarity with Texas law.

• The FTC has affirmatively chosen not to speak to the proponents of the rule, or to review the testimony offered before TREC during the last two years.

• The letter ignores any benefits that the rule has to the consumer. The commission is, by law, charged to protect the public and has carefully considered this issue for two years, and yet the FTC seems to state that they know better the commission.

• Texas law currently obligates a broker, who takes a listing, to negotiate the best possible transaction for the consumer. The FTC argues that the commission should ignore this part of the law and that a broker should have no duty to act in the best interests of his client. The FTC simply does not understand the rule's purpose.

• The FTC wants a broker to be able to hold himself out as an exclusive agent for a seller, but have no accountability to the consumer as an agent. They want the consumer to have no recourse against a broker who deceptively holds himself out as a consumer's agent.

As TAR indicates, the Texas Real Estate Commission is expected to vote on the proposed regulation, entitled Broker's Responsibility, 30 Tex. Reg, 1400, on Monday, April 25, 2005, only days after receiving the DOJ, TREC rebuke. The proposed regulation would amend the Texas Administrative Code, title 22, section 535.2.

A copy of the letter sent to the Texas Real Estate Commission is available from the Department of Justice.

Published: April 22, 2005

Use of this article without permission is a violation of federal copyright laws.

Blanche is a renowned author of five real estate books. Her newest, Bubbles, Booms and Busts: Make Money In Any Real Estate Market, McGraw-Hill, was rave-reviewed by The New York Times. She was also selected from hundreds of real estate experts to contribute to Donald Trump's book, Trump: The Best Real Estate Advice I Ever Received: 100 Top Experts Share Their Strategies, Rutledge Hill Press, and is featured on page 68. Order Now Review - Honors In 2006, Blanche was selected among scores of candidates to author two consumer real estate guidebooks for the National Association of Realtors: The NAR Guide to Home Buying, and The NAR Guide to Home Selling, Wiley & Sons. She is currently planning two new books for the NAR and its members.       Known for her keen insight into real estate industry issues and for her ability to make complex subjects easy to understand, Blanche is a sought-after keynote and continuing education speaker. Real estate organizations from MLSs, to brokerages, to franchisors, to associations hire her to provide up-to-the-minute analysis of real estate industry news and advice on how to improve revenues. Her passionate delivery, peppered with stinging wit, is a huge hit with audiences and fans. Don Klein, CEO Greater Nashville Association of Realtors, Blanche Evans, Richard Courtney, president 2007, GRAR "The GNAR membership meeting last week featured Blanche Evans as the keynote speaker. Her comments and insights resonated extremely well with those in attendance and we have had many requests for copies of her PowerPoint Presentation. She was a terrific part of the membership meeting and convention program!" - Don Klein, CEO Greater Nashville Association of Realtors Coverage from WSMV, Nashville - 8-14-2007 That Interview Guy - Get Inside The Head Of Today's Generation 2007 AE Institute Session - To purchase 2006 AE Institute Session - Parts 1 2 3 4 5 6 7 8 9 HouseValues Mastermind call - Parts 1 2 Blanche's fireside chat with Jeremy Conaway, HAR - Click here. For more articles by Blanche, click here.