Members of the Texas Real Estate Commission voted this week to propose a state rule that would change the way some discount brokers do business in the state.
Under the proposed rule, real estate brokers would be forced to accept and present offers and counteroffers to buy, sell or lease property on behalf of their clients; assist clients in developing, communicating, and presenting offers, counteroffers and related notices; and answer their clients’ questions relating to offers, counteroffers and notices.
Opponents of the rule argue these minimum-service requirements would alter some limited-service and discount models that allow consumers to choose and pay for only the real estate services they want.
The commission, after considering an opinion by the Texas Attorney General’s Office and hearing public comments, formally proposed the changes at a Monday meeting.
In November 2002, the commission adopted an amendment to state administrative code to establish service standards, though the commission repealed this amendment in May 2003.
The commission later reconsidered the rule change, and the Attorney General’s Office in December 2004 issued an opinion that supported the commission’s authority to adopt the amendment.
The meeting was crowded to capacity with real estate professionals who were interested in the proposed rule change, attendees said. There will be a 30-day comment period before the rule change can be formally adopted, and the rule change does not require a vote by the state Legislature.
The Texas Association of Realtors issued a statement Monday supporting the proposed rule change, referring to the decision as “a victory for consumers.”
Bill Miller, a spokesman for the association, said, “The rule clarifies state law by requiring all real estate brokers to provide the full range of services for consumers making the biggest purchase of their lives. We applaud the commission for enforcing state law and reaffirming these important consumer protections.”
Meanwhile, Aaron Farmer, broker-owner of Austin-based Texas Discount Realty and a vocal opponent of the proposed rule change, said today that when he spoke against the proposed rule at the commission meeting Monday he felt like George Bush must feel going to France.
Farmer said there were about 150 Realtors in attendance at the real estate commission meeting, and most of them appeared to support the rule change.
He said he “fully expects” that the Federal Trade Commission, which has been following the rule-change issue in Texas, will comment on the proposed rule change, and he also plans to issue a written comment on the planned rule change.
Bob Hale, executive officer for the Houston Association of Realtors, spoke in favor of the rule change at the meeting. Hale said today that the rule change “simply clarifies what the existing law is today” by specifying broker duties to negotiate on behalf of their clients.
The rule change is designed to clarify law rather than to create law, he said, and the commission “passed exactly what the attorney general told them they had the right to pass and used the wording he recommended.”
Hale noted that in the years since Texas first proposed the minimum-service language, other states have also pursued similar service standards for real estate brokers.
The Illinois state Legislature passed an act in August 2004 that defined minimum-service standards for real estate agents who enter into written brokerage agreements to act as the exclusive representative of a client. The Missouri state Legislature is considering a similar measure, and other states, too, are looking at similar changes.
Meanwhile, the Wisconsin Realtors Association is considering its own licensing law changes relating to limited-service brokerages.
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