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Consumer groups support REX lawsuit against the anti-discount law

The Consumer Federation of America and the Oregon State Public Interest Research Group argue that the ban on discounts for buyers and sellers stifles commission competition and harms consumers.

Consumer watchdog groups line up to support an antitrust lawsuit by discount broker REX Real Estate against Oregon’s anti-rebate law.

The Consumer Federation of America (CFA) and Oregon State Public Interest Research Group (OSPIRG) announced Tuesday that they were filing an amicus letter in support of REX’s lawsuit against a law in Oregon that bans real estate agents from offering discounts to homebuyers that Law prevents discount brokers from offering consumers reduced real estate commissions from the typical 5 to 6 percent split between listing and buyer brokers.

An amicus letter is a legal filing by someone who is not a party to a lawsuit but has a strong interest in the matter. Such “friend of the court” letters are often filed in cases involving matters of broad public concern.

“CFA and OSPIRG believe this is so [rebate] The ban harms Oregon home buyers and restricts price competition in a brokerage market where that competition is already severely restricted, ”the letter said.

While some of the points in the brief correspond to those made recently in a study commissioned by REX that argues that property commissions are inflated due to the lack of price competition created by setting co-op fees for buyer-brokers , CFA and OSPIRG said in a press release that they “have no institutional or financial relationship with any element of the real estate industry”.

In the letter written by Stephen Brobeck of CFA, it is argued that the ban on buyer discounts increases commission levels, which are high compared to other countries and almost uniform in the US, as a multiple listing service (MLS) rule dictates, that listing brokers must offer buyer brokers “a fixed price”, non-negotiable commission. “This rule is challenged by several lawsuits against the National Association of Realtors (NAR), Realogy, Keller Williams, RE / MAX, and HomeServices of America.

Stephen Brobeck

“Despite widespread industry opposition to commission negotiation, sellers have the option of getting a price below the prevailing price by either finding a traditional listing agent who will reduce their commission or a discount broker like Redfin set, “says the letter.

“But Oregon buyers don’t have that option. As already explained, the buyer-broker commission is relatively fixed and non-negotiable. And since it’s usually built into the selling price, the buyer ends up paying most or all of the money. Discounts relieve buyers who are unable to negotiate lower commissions and who then have to pay a higher sales price. “

The brief hints that discounts could save buyers thousands of dollars in a market where the vast majority of renters want to buy a home but cannot afford it.

“Without the discount ban, other discount brokers and possibly even some traditional brokers would be offering discounts to home buyers,” the letter said. “In the state of Washington next door, many agents offer discounts. Those who only worked for one company, Redfin, participated in an estimated five percent of all Seattle home sales in 2016. Recently, the company offered buyers an average refund of $ 3,500. “

The letter indicates that 40 US states and Washington DC are offering buyer discounts. Maryland, for example, prohibits discounts to unlicensed individuals providing brokerage services, but allows buyers and sellers to receive discounts because, according to the letter, they have not provided any services.

“We urge the court to find a way to make these discounts legal to encourage price competition and help consumers,” the letter said. “Other states with laws that prohibit the sharing of commissions to unlicensed parties, similar to Oregon’s, have made exceptions for customer discounts. Insisting that Oregon make such an exception would serve the public interest. “

Read the letter:

Email Andrea V. Brambila.

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