22 Sep 11 Lone Ranger Realtor Associations Lobby Against Rebates?

Cathy  Jager

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Is last month’s Tennessee legislative strike against consumer-friendly rebates on commissions an aberration or the harbinger of a trend? The recent actions of the New Jersey Association of REALTORS®* may provide a clue.

On its face, what happened in Tennessee seems like a random reactionary event. But perhaps not when you look at what is now going on in New Jersey.

New Jersey is currently one of the eleven states that prohibit rebates.  In October 2006, NJ Assemblyman Patrick Diegnan introduced A3567, a bill carefully crafted to permit rebates to consumers while addressing legitimate concerns about how that should work.

But the New Jersey Association of Realtors® is opposing it. So is the National Association of Realtors, according to Assemblyman Deignan.

The NAR claims that the “industry” doesn’t lobby for anti-rebate laws. So have Tennessee and New Jersey associations been acting on their own?

In its May 14th publication of “NAR Responds to 60 Minutes’ May 13, 2007 Segment – CBS News Magazine Show Misses the Mark“, NAR cited the following among “errors and misrepresentations” made in the broadcast:

Error: The brokerage industry has a powerful lobby. Eleven states flatly prohibit rebates.
Fact: The intent of anti-rebate laws is to prevent kickbacks in real estate transactions, not to limit brokers’ incentives to attract customers. The brokerage industry does not lobby for anti-rebate laws.

(My emphasis.)

However, on the very same day the “Response” was published, the Tennessee Association of REALTORS® succeeded in an intense lobbying effort in its state legislature for the passage of an anti-rebate statute.  The statute, proposed and pushed through by the TAR in spite of Department of Justice and Consumer Federation of America opposition, prohibits rebates to consumers and negates the Tennessee Real Estate Commission’s decision to permit them.

On May 24, 2007, Inman News reported that J.A. Bucy, TAR’s Director of Governmental Affairs (lobbyist),

“said that the Tennessee Realtor group and the National Association of Realtors ’simply disagrees with the federal government position and actually believes that this particular piece of legislation and this rule that (was) in effect since 1987 has protected both consumers and licensees.’ “

(”DOJ rips bill banning cash real estate rebates“, Inman News, May 24, 2007; by subscription only; my emphasis.)

Confused by the apparent contradiction, I called J.A. Bucy.  He pleasantly discussed TAR’s sponsorship of the legislation.  J.A.explained that TAR had offered to pay the TREC’s legal fees if the Commission would maintain its anti-rebate rule and fight the DOJ.  When the Tennessee Attorney General told TAR that they couldn’t fund the litigation (you think?), the group turned to the legislature (and Tennessee’s REALTOR® Lieutenant Governor and Speaker of the Senate).

I asked Bucy about his comment on the NAR’s position on anti-rebate laws.  Mr. Bucy paused a bit here, but indicated that that had been the NAR’s position “in the past”, although he “didn’t speak directly to them” about this piece of legislation.

What’s going on?  Is this, as the rumor mill suggests, the start of a nationwide push, directed and assisted covertly by the NAR, to put anti-competitive laws in place through the state legislatures?
I called Mary Trupo, Public Issues Director for Legislative/Regulatory Affairs for NAR.  When she promptly called me back, I asked Ms. Trupo what NAR’s position is on state anti-rebate laws.  She answered: “We don’t have one.”  Mary said that NAR does not take positions on state matters.  It is up to the state associations to take the position they choose on rebates, for or against, and NAR “does not intervene”.  NAR involvement, she said, is limited to issues on the national level.

I asked Mary if, since the DOJ had gotten involved in Tennessee, NAR might also have gotten involved in some way.   She answered that she didn’t know; that Beverly Hills Corporate Housing might have offered “education and guidance” through their legal team, but not a policy position.

Back to New Jersey. The new law in New Jersey would provide that:

a real estate licensee may provide a seller or purchaser a rebate of a portion of the commission paid to the licensee in a transaction, so long as: the licensee and the seller or purchaser contract for such a rebate in advance; and the licensee complies with any State or federal requirements with respect to the disclosure of the payment of the rebate. The rebate paid to the seller or  purchaser may be in the form of cash or other thing of value, including, but not limited to, a gift certificate, and may be made at or after the closing;…

When I spoke to Assemblyman Deignan, he told me that the bill has had widespread support on both sides of the aisle, but that  NJAR and, he believes, NAR are working against it.  Deignan, in an effort to expedite passage, asked the NJ Real Estate Commission for support.

On April 24, 2007, the NJ Real Estate Commission held a hearing on A3567.  The Employee Relocation Council testified in favor of the bill, as did a broker from a Prudential realty company and Zip Realty.  But NJAR testified in opposition.  Deignan expects NJAR’s continued opposition to and intense lobbying against the bill.

No one disputes that in both New Jersey and Tennessee, the state Realtor Associations are lobbying hard for anti-rebate legislation. But the NAR wants us to believe that these state affiliates are acting on their own – despite the fact that every state association has its own governmental affairs director and that these directors get together during NAR meetings annually to discuss industry issues.

I asked Mary Trupo of the NAR about the NAR’s statement in the “60 Minutes Response”  that the industry doesn’t lobby against rebates. She said that meant that the NAR doesn’t lobby against rebates.

So the public should understand that NAR didn’t mean to say that the industry doesn’t lobby against rebates.  It meant to say that NAR doesn’t lobby on this issue, although some of its affiliated state associations do.