STEPHEN RYAN
Gathering information

Realtors in a handful of states have been pursuing legislation that would specify the level of service real estate companies must provide to consumers, and industry leaders in the Bay State are closely monitoring those efforts.

Realtor associations in Oklahoma, Illinois, Michigan and Texas have pushed legislative or regulatory changes that would require companies and real estate brokers to offer a minimum level of service to buyers and sellers. The drive comes as a growing number of companies are offering limited real estate services for a flat fee or discounted commission.

Supporters of such laws argue that they are designed to protect consumers. But opponents say that these efforts have nothing to do with consumer protection. They maintain that such campaigns are aimed at stifling competition from companies that offer limited services to buyers and sellers for lower or flat fees, rather than providing the full range of services that traditional real estate brokerage firms offer for a commission.

Currently, there is no movement afoot in Massachusetts or the other New England states to have such legislation put in place. But a spokesman for the Massachusetts Association of Realtors acknowledged that the trade group is “closely watching the issue and what’s transpiring across the country.”

“We’re in the process of gathering information on the issue,” said Stephen Ryan, general counsel and government affairs director for MAR. “There’s a large amount of research we need to do before formulating a position on this issue.”

Allyson J. Bernard, a Realtor in Danbury, Conn., who serves as the New England regional vice president for the National Association of Realtors, said she is not aware of any states in the region that are currently seeking to establish laws requiring real estate brokerages to provide a minimum level of service.

“Right now, it looks like there [are] no legislative issues pending in reference to minimum service levels in New England,” she said.

Other states, however, are considering legislation regarding the types of services real estate brokers and agents provide. That’s because the number of agents and firms that are charging lower or flat fees for limited services has increased in recent years. Some of those companies list a seller’s home on the local multiple listing service for a flat fee, saving sellers thousands of dollars that they would have to shell out for a typical real estate commission but leaving them to do most, if not all, of the negotiating and other functions involved with a real estate transaction themselves.

Many traditional real estate agents and brokers, meanwhile, have complained that they’ve been forced to help both the buyer and seller in transactions when one of the parties is working with a limited-service broker. That has prompted Realtor groups to take steps to alleviate such concerns.

‘Creative’ Plans

Last August, Illinois became the first state to approve a law that requires brokers who have exclusive brokerage agreements to help clients accept, negotiate and present purchase offers and counteroffers.

Nearly three years ago, the Texas Association of Realtors asked the real estate commission to set a minimum service level that real estate brokers had to provide, including showing the property and handling all offers and counteroffers. The commission’s initial plans to change the state’s real estate regulations were stalled, but last year the commission renewed its attempts.

The Michigan Association of Realtors is currently crafting legislation that is similar to the Texas and Illinois efforts.

Earlier this month, the Oklahoma Senate approved a bill mandating real estate professionals to perform a minimum set of real estate services for consumers, but the House last week delayed acting on the bill after the Antitrust Division of the U.S. Department of Justice urged the state legislators to reject it.

“Such a law will decrease competition among real estate professionals and will result in Oklahoma homebuyers and sellers paying higher real estate commissions,” Assistant Attorney General R. Hewitt Pate wrote in a letter to Oklahoma legislators.

Pat Rioux, who started ListforLess.com in Marlborough seven years ago, said the move toward requiring minimum service levels is “the fever that seems to be sweeping the country.”

But Rioux, who charges sellers a flat fee to list their homes on the multiple listing service and never works with buyers, fears that the attempts to change rules and laws will be especially harmful to sellers by limiting the number of choices they have.

The movement for legislation has been “under the guise of consumer protection,” according to Rioux. “I’ve worked with hundreds of sellers and I don’t feel that even one has misunderstood the type of service I provide,” she said.

Rioux said some consumers, including investors, builders and developers don’t need or want full real estate services. In fact, Rioux said that many sellers she’s worked with have told her they’ve enjoyed having more control over how and when their home was marketed and shown to potential buyers.

“To take the option away is almost an insult to people,” she said.

But some Realtors feel that a minimum service level may do more good than harm, and they advise consumers to be cautious when selecting a broker or agent.

“Obviously, real estate companies are getting creative with business plans,” said Bernard, the Connecticut Realtor. “Everybody has the right to their own business model. My only concern as a Realtor is that the consumer knows exactly what they’re getting for their dollar and what level of service they are, or are not, paying for.”

David S. Drinkwater, president of Grand Gables Realty Group – a full-service brokerage firm based in Scituate – said consumers should be aware of the benefits and costs of utilizing different types of real estate services.

“No matter whom a consumer is choosing, they ought to be choosing the brokerage firm or agent based on the services they’re providing and with an understanding of what other services are available,” Drinkwater said.

The National Association of Realtors has not taken an “official stance on the topic,” said Steve Cook, the association’s vice president of public affairs. The association has a set of recommended standards of service for members, but Cook pointed out that they are not mandatory.

Aglaia Pikounis may be reached at apikounis@thewarrengroup.com.