In Ohio, real estate agents must be licensed by the Ohio Department of Commerce. There are two types of real estate agent licenses in Ohio: real estate salesperson and real estate broker. Each real estate salesperson must belong to at least one real estate agency.
Although real estate agents are commonly referred to as “real estate agents,” real estate agents may not refer to themselves as “real estate agents” unless they are members of a national trade association for real estate agents called the National Association of Realtors (NAR). You can not. Membership includes special marketing tools and other benefits.
NAR counts 1.5 million real estate agents as members, making it essentially the default/universal trade association for real estate agents in the United States.
Requirements for NAR membership include compliance with NAR Membership Rules. NAR’s rules prohibit members from negotiating commission rates, require members to only allow real estate sellers to pay sales commissions, and require members to allow real estate buyers and sellers to limit the seller’s commission payment obligation to buyers. It is prohibited to allow the transfer of
Ironically, almost everything in a real estate transaction is negotiable. Prices are negotiable. Who pays for the test and resolves any issues identified by the test is negotiable. Who pays the closing fee is negotiable. Who pays the buyer’s prepaid real estate taxes and assessed value is negotiable.
However, because nearly every real estate transaction involving a real estate agent involves at least one NAR member, who pays the sales commission and how much is virtually non-negotiable.
This dichotomy between real estate commissions and all other aspects of real estate transactions has recently received significant legal attention.
The focus on non-negotiability of everything in business is particularly acute, as American and Ohio law tends toward “freedom of contract” in its broadest general sense.
For example, a fundamental principle of the new Ohio LLC law of 2022 is “freedom of contract.” In addition to prohibiting people from defrauding each other, current Ohio LLC law negotiates nearly every aspect of the relationship between LLC owners (called members) and requires them to be included in the LLC’s operating agreement in the form of a contract. can be determined.
In late October 2023, a Missouri class action lawsuit ended in a de facto monopoly for NAR and several large real estate brokerages after a jury found that fee requirements were illegal and cost consumers more than they legally could. Received a jury verdict of $1.8 million. appropriate. Remarkably, the $1.8 billion jury award pales in comparison and contrast to the estimated $100 billion in real estate commissions paid annually by buyers and sellers of U.S. real estate.
Separate from the Missouri case, which is expected to be appealed, the U.S. Department of Justice has sought permission to investigate NAR under federal antitrust law.
Consumers can shop for the ideal combination of price and service on nearly everything except real estate commissions. The wheels of justice move slowly, but the unfixable treatment of real estate commissions may finally become a thing of the past.
Lee R. Schroeder is an Ohio licensed attorney with Schroeder Law LLC in Putnam County. He limits his practice to business, real estate, estate planning and agricultural matters in northwest Ohio. You can contact him at: [email protected] or call 419-659-2058. This article is not intended to be legal advice, and you should seek specific advice from a licensed attorney of your choice based on the specific facts and circumstances facing you.