The Justice Department sued the state of Kentucky yesterday, arguing that its rules prohibiting real estate brokers from offering rebates to customers violate federal antitrust law.
Kentucky is among a handful of states that prohibit residential brokers from offering cash rebates or other bonuses such as free home inspections. The Justice Department suit argues that the Kentucky Real Estate Commission, in enforcing the law, creates an anti-competitive market for brokerage services in the state. It cites results from a survey about the policy in which one anonymous broker said, "If inducements were allowed, they would lead to competitive behavior, which would make us look unprofessional in the eyes of the public."
Realtors nationwide are coming under fire for what critics argue is noncompetitive behavior. In Wisconsin, for example, one broker is suing the local Realtors group for trying to exclude nonmembers from the Multiple Listing Service, the most exhaustive database of information on homes for sale. A spokesman for the National Association of Realtors referred comment on the Kentucky lawsuit to the Kentucky Association of Realtors.
The suit portrays the commission as being deeply intertwined with the Kentucky Association of Realtors, stating that the association provides lists of potential nominees for the commission and participates in joint task forces to write regulatory texts.
However, Dot Miller, president of the association, said the Realtors group has no formal position on whether there should be rules against rebates and other bonuses used to attract clients and that its members are divided.
"The members who want to change it think it is a restraint of trade for them, and they want to offer and do different things," Miller said. "The ones who are happy with the status quo don't see where it would improve their way of doing business."
Sue Teegarden, chairwoman of the Kentucky Real Estate Commission and a broker herself, said in a telephone interview yesterday that the commission is caught between state law and the Justice Department suit, and has no strong position in favor of the current law. "We'll just have to see where it plays out," Teegarden said. "We couldn't change the law if we wanted to."