The Virginia Real Estate Commission and 4-3-2-1 Realty Inc. of Fairfax have reached agreement in an out-of-court settlement that will permit the real estate firm to offer a 2 percent rebate to home buyers.
For more than two and a half years Alice Maher, co-owner with her late husband Bud of the Fairfax real estate firm, battled the Virginia Real Estate Commission and other area realtors for the right to offer discount commissions for home sales. The out-of-court settlement, reached earlier this month, finally ended the litigation.
The rebate applies on the sale of a house listed by another broker and sold by the Maher firm. Normally, the commission paid by the seller would be split equally between the firms that bought buyer and seller together. Thus, on a 6 percent commission (the commission most commonly charged in Virginia), each firm would take 3 percent. Maher proposed to give back 2 per cent to the buyer as a discount.
On a $75,000 sale, this reduces the real cost to the buyer by $1,500, or enough to pay virtually all the settlement costs, she said.
(On houses listed for sale with 4-3-2-1- Realty, the seller's commission is charged on a sliding scale depending on the amount of effort required by the realtor. When a 4 percent commission sale is co-brokered, the other realtor gets 3 per cent - if his or her regular selling commission is 6 percent. If the Maher firm provides the buyer, the total commission goes down to 3 percent. And if the seller takes over showing the house, it drops to 2 percent.)
Soon after the Mahers began discounting in 1972, some of their Northern Virginia competitors who were charging 6 percent or more boycotted their listings. The Mahers filed an antitrust suit and got a settlement of $125,000.
In the fall of 1976, the Mahers filed suit against the Virginia Real Estate Commission on the grounds that its regulation against rebates was unconstitutional. The commission's position, she said, was that if there was to be any rebate, it should go to the seller who pays the entire commission. Maher argued this was unnecessary since the seller had agreed to pay the 6 percent as a condition of listing with a certain realtor.
Three months later the commission amended its regulation to allow the rebate, provided all prospective parties were notified and agreed to it before the listing agreement and sales contract were signed. This meant in effect, Maher said, that no rebate could be offered the buyer until the seller had agreed, or that the prospective buyer could even visit the house until the seller had agreed.
Maher said that during a preliminary hearing the judge had challenged the commission to prove how the seller was really being hurt by giving the buyer the rebate. Maher also indicated that the conviction of six Maryland realtors for conspiring to fix prices might have been a factor.
Peyton Klopfenstein, a member of the commission, was asked to comment on Maher's story. He replied, "I can't respond to one that is so full of complete distortion. It is not worth responding to it."