The New Mexico Real Estate Commission has voted to approve a measure, opposed by the U.S. Department of Justice, that requires all licensed real estate professionals in the state to perform a specific set of services for their clients – even if a consumer does not want the agent to perform those services.
The rule change, which will reportedly take effect within about a month after the commission formally files the rule change, effectively bans certain types of real estate business models such as fee-for-service companies that place properties in a multiple listing service for a flat fee while providing few other services for clients. Some discount real estate brokers opposed the changes.
Controversy has surrounded the establishment of so-called minimum-service requirements for real estate professionals in other states, too.
Opponents have claimed the laws are anticompetitive, restrict consumer choice and potentially drive up the cost of real estate services. Proponents claim the measures can protect consumers by ensuring sufficient levels of representation, and that the measures can guard against situations in which an agent serving a consumer on one side of a transaction may feel obligated to provide service to a consumer on the other side of the transaction who is not fully represented by a real estate professional.
Proponents have also said that some minimum-service companies do not meet basic standards under some real estate agency laws.
Wayne Ciddio, executive secretary for the New Mexico Real Estate Commission, did not respond to Inman News requests for comment.
The commission met in the Las Cruces, N.M., brokerage office of commission chairman David Steinborn for two days last week. The commission held a hearing on Wednesday and voted Thursday to approve the rule change.
Previously adopted state rules required real estate professionals to provide certain services to consumers, though consumers could choose to waive those requirements.
Under the rule change, real estate brokers in the state must accept and present all offers and counteroffers to buy, sell or lease a client’s property, and to assist a client “in developing, communicating, negotiating and presenting offers, counteroffers and notices that relate to the offers and counteroffers until a lease or purchase agreement is signed and all contingencies are satisfied or waived.”
Legislators and governors in several states have approved minimum-service legislation despite objections from federal agencies, including the Justice Department and Federal Trade Commission.
In November, the Justice Department sent a letter to the New Mexico commission opposing the rule change, and the commission delayed consideration of the rule change.
The Justice Department sent a representative to attend the New Mexico Real Estate Commission meetings last week.
Bill Jones, a lawyer for the Justice Department’s antitrust division, spoke during the commission hearing and reiterated the department’s views on the proposed rule changes relating to the elimination of a waiver provision in the state’s minimum-service rules.
John R. Read, chief of the Justice Department’s Litigation III section, said, “Our view is consumers should have choices. For example, if you’re a (for-sale-by-owner) and would like to get listed on the MLS, you ought to be able to buy that service without having to buy everything else that goes along with it.”
“We have found no filed complaints regarding fee-for-service brokers,” Read also said.
And the waiver provided under New Mexico’s former rules allowed consumers to choose which real estate services they want, which Read said was beneficial to consumers.
Victor Ramos, president of the New Mexico Association of Realtors and qualifying broker for the Premier GMAC Real Estate relocation office in Albuquerque, said today that the association supported the rule change as a way to protect consumers.
“The association’s view on that issue is that it’s all about the protection of the consumer. (The change) was needed in order to fully support the consumer in the selling of their home so they would have full knowledge of what was available,” he said.
The state Realtor group requested that a legal representative from the National Association of Realtors attend the meeting to serve as a resource, he added.
The national trade group has stated that it has not taken a formal stance in support of states’ minimum-service measures, though the group has not acted to discourage state trade groups from supporting the measures. In several states, Realtor trade groups have lobbied aggressively to support introduction and passage of the measures.
Lisa Hebenstreit, a New Mexico real estate broker who offers flat-fee, limited-service property listings and also represents home buyers, spoke against the rule change at the commission’s meeting.
“Basically (the commissioners) are telling me that since I’m a licensee I’ve got to do more than I’m doing for my customers,” she said. “I think they do not want for-sale-by-owner people to have access to the MLS – that’s what the issue is. And that was the service I provided. I think (the rule) is about money and I think it’s about protecting the industry.”
Hebenstsreit said she isn’t aware of any complaints from consumers or harm that has occurred from discount real estate companies that will be impacted by the rule change. “Tell me who has been harmed by this and why the public has been harmed.”
Ralph Holmen, associate general counsel for the National Association of Realtors who spoke at the New Mexico Real Estate Commission hearing, could not be reached for comment.
Ramos said it is his understanding that the rule change will be enacted within about three to four months.
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