Minimum Service Laws in Texas
On September 1, 2005 Texas implemented new Minimum Service provisions for Texas Real Estate Agents and Brokers. This new law was enacted by the Texas State Legislature primarily because of the efforts of the Texas Association of Realtors and was based, in my opinion, on the general fear of the traditional real estate community that new models for providing services to consumers in Texas was erroding the traditional brokerage fee structure.
Lobbying efforts by the TAR during 2004 and the spring of 2005 were culminating in the Texas Real Estate Commission proposal to implement new regulatory restrictions on how brokers and agents would be permitted to interact with their clients and the Department of Justice and the Federal Trade Commission filed briefs with the TREC alerting the TREC that enactment of such regulations would be considered by the DOJ and the FTC to be an infringement on competition and that the DOJ and the FTC would seriously consider filing legal actions against the TREC for enacting regulations that were anti-competitive and anti-consumer.
As a result the TAR contacted a state legislator who was a prior member of the TAR and submitted a rider to a school finance bill that was passed at the last minute during a special session. This rider enacted the laws that were implemented on September 1, 2005.
The new laws states the following:
NetOffer has found that it is very easy to comply with both the spirit and the letter of the new law and we would like to explain how we do that.
NetOffer has never objected to other Agents/Brokers communicating with the Seller when we list a home, yet, we stand ready to assist with the communicating process to the extent that our client (the Seller) or the other Agent/Broker requires. Each of our Listing Packages includes a minimum amount of 'Pre-Paid' consultation time. The reason that we include prepaid consultation time is to allow for some minimum level of communications to assist with the sale without our client feeling the pressure of our billing clock ticking.
Many Agents/Brokers representing the Buyer are uncomfortable dealing directly with the Seller, especially now with the new law. The new law makes it illegal for an Agent/Broker to negotiate with the Seller if the Seller is represented by another Agent/Broker. When you list your home on the MLS with NetOffer we become your Broker and are your legal representative according to state law. The new law says that even if you, the Seller, gave written permission for them to negotiate directly with you they would be violating the law if they did so and they could lose their license for ignoring the law.
Some Agents/Brokers will continue to be willing to negotiate directly with the Seller but they do so at their own peril. NetOffer can not give instructions to the Buyer's Agent/Broker to negotiate with the Seller because that also is a violation of the law and would subject NetOffer to the loss of our license.
NetOffer will always be glad to transfer offers and counter-offers between Buyers Agents/Brokers and Sellers without charge. Communications over the phone or in writing will take time and that time will be charged to the 'prepaid' time of the Seller. If we use up the prepaid time we will notify the Seller and let the Seller know that additional charges for time could be incurred. If additional charges are incurred we charge based on a fee of $150/hour with one hour minimum increments of payment but we track actual time used in 15 minute increments. This means that after you use your prepaid time the next $150 will cover four conversations, or one hour of time, however the time is used.
We feel that this is the most fair way to provide professional services. It certainly makes a lot more sense for the Seller than paying 2% or 3% of the equity in their home for what is generally a few hours of time spent on the listing. Don't you agree?
Please let me know your thoughts by providing your comments to this posting.
Lobbying efforts by the TAR during 2004 and the spring of 2005 were culminating in the Texas Real Estate Commission proposal to implement new regulatory restrictions on how brokers and agents would be permitted to interact with their clients and the Department of Justice and the Federal Trade Commission filed briefs with the TREC alerting the TREC that enactment of such regulations would be considered by the DOJ and the FTC to be an infringement on competition and that the DOJ and the FTC would seriously consider filing legal actions against the TREC for enacting regulations that were anti-competitive and anti-consumer.
As a result the TAR contacted a state legislator who was a prior member of the TAR and submitted a rider to a school finance bill that was passed at the last minute during a special session. This rider enacted the laws that were implemented on September 1, 2005.
The new laws states the following:
- Agents/Brokers can not negotiation directly with the Principals of other Agents/Brokers., and,
- Agents/Brokers must answer questions of their Principals realted to the purchase or sale of the property for which they have been engaged as an Agent/Broker, and,
- Agents/Brokers must communicate offers between other Agents/Brokers and their Principal.
NetOffer has found that it is very easy to comply with both the spirit and the letter of the new law and we would like to explain how we do that.
NetOffer has never objected to other Agents/Brokers communicating with the Seller when we list a home, yet, we stand ready to assist with the communicating process to the extent that our client (the Seller) or the other Agent/Broker requires. Each of our Listing Packages includes a minimum amount of 'Pre-Paid' consultation time. The reason that we include prepaid consultation time is to allow for some minimum level of communications to assist with the sale without our client feeling the pressure of our billing clock ticking.
Many Agents/Brokers representing the Buyer are uncomfortable dealing directly with the Seller, especially now with the new law. The new law makes it illegal for an Agent/Broker to negotiate with the Seller if the Seller is represented by another Agent/Broker. When you list your home on the MLS with NetOffer we become your Broker and are your legal representative according to state law. The new law says that even if you, the Seller, gave written permission for them to negotiate directly with you they would be violating the law if they did so and they could lose their license for ignoring the law.
Some Agents/Brokers will continue to be willing to negotiate directly with the Seller but they do so at their own peril. NetOffer can not give instructions to the Buyer's Agent/Broker to negotiate with the Seller because that also is a violation of the law and would subject NetOffer to the loss of our license.
NetOffer will always be glad to transfer offers and counter-offers between Buyers Agents/Brokers and Sellers without charge. Communications over the phone or in writing will take time and that time will be charged to the 'prepaid' time of the Seller. If we use up the prepaid time we will notify the Seller and let the Seller know that additional charges for time could be incurred. If additional charges are incurred we charge based on a fee of $150/hour with one hour minimum increments of payment but we track actual time used in 15 minute increments. This means that after you use your prepaid time the next $150 will cover four conversations, or one hour of time, however the time is used.
We feel that this is the most fair way to provide professional services. It certainly makes a lot more sense for the Seller than paying 2% or 3% of the equity in their home for what is generally a few hours of time spent on the listing. Don't you agree?
Please let me know your thoughts by providing your comments to this posting.
posted by DallasFlatFee at 3:16 PM
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