It was hard to miss when a huge article entitled, "The Last of the 6-Percenters?" appeared on the front page of The New York Times Sunday business section. It discussed discounted brokerage services at length. (September 3, 2006)

"In many cities," said the Times, "real estate agents have tried to restrict access to M.L.S. information or to limit its use on the database. Some have asked state legislatures to pass laws forcing brokers to offer certain levels of service."

These words are all about minimum services and the perception that the growing industry demand for minimum standards of practice is nothing more than a cloaked effort to stymie discount brokers.

As the Times explained, "The Justice Department and the Federal Trade Commission have fought these tactics in Texas, Kentucky, Tennessee and Oklahoma, among other states, and the department is suing the National Association of Realtors, the powerful trade group of agents and brokers, over what it calls anti-competitive rules."

Anti-competitive? Why aren't these contentions addressed head-on? The presumptions found within this article are simply unchallenged. Does this mean they're true?

An appropriate letter to the business section might have read like this:

The New York Times implies that the real estate community is somehow wrong to have "asked state legislatures to pass laws forcing brokers to offer certain levels of service." (The Last of the 6-Percenters? September 3, 2006)

Minimum standards of practice are not only necessary, they protect the public interest and are entirely common in every field. For instance, the New York Times has minimum journalistic standards for its reporters and editors and when those benchmarks are violated it's national news. It's ludicrous and illogical to believe that minimum standards are okay in every profession and trade except real estate brokerage, an activity which involves the largest purchase of a lifetime.

Imagine a seller who lists a home exclusively with a broker. Imagine also that under law this broker is not required to negotiate on behalf of the owner, not obligated to answer seller questions and not mandated to communicate with either buyer or seller. In practice this owner will likely wind up relying on a buyer's broker for information and advice -- someone obligated to get the best possible price and terms for the purchaser.

Does the Times believe that consumers should be allowed to sign a few sheets of paper waiving minimum service obligations? Would the Times advocate such waivers with a doctor? A lawyer? A financial planner? Does the Times really believe that buyers and sellers who sign waivers will fully understand the rights and benefits they're abandoning?

Any number of brokers now offer a variety of service packages and diverse pricing plans. These brokerages are active and function entirely well within jurisdictions that have established minimum service requirements -- including Texas, Kentucky, Tennessee and Oklahoma. These organizations price as they please, belong or not to MLS services as they prefer and enrich the array of consumer choices available in their local markets.

The fact that the Internet exists and is widely used is irrelevant to the discussion of minimum standards. Since all brokers have equal access to the Internet and related software, it follows that the Internet -- by itself -- does not produce a competitive advantage. Instead, brokers prosper by achieving marketplace success and operational efficiencies, advantages not restricted to one form of practice, one pricing format or one website.

If there are no minimum standards then how can state real estate regulators fine errant licensees or suspend or terminate licenses? How can state prosecutors bring charges against licensees who violate regulatory norms if there are no norms?

The issue of minimum services is consistently mis-characterized and thus misunderstood as an effort to constrict competition and raise prices. The time has come to get it right: Minimum standards of service in real estate protect buyers and sellers. Brokers should be required to meet minimum standards, just as professionals in every field are required to meet reasonable standards of practice.

For more articles by Peter G. Miller, please press here.

Published: September 26, 2006

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