TAR's antics in Tennessee (H.B. 2095)

The recently released FTC/DOJ Report on Competition in the Real Estate Brokerage industry notes that the Tennessee Real Estate Commisison has for some time been in the process of reversing its anti-rebate rule. The Report notes, at footnote 251, that the final repeal of the rule would likely take effect this month. In fact, the DOJ letter discussed below suggests that final repeal has already been achieved.

Obviously wise to the Commission's intentions, the Tennessee Association of Realtors has apparently been pressing the state legislature to counter the effect of a repeal by essentially codifying the rule in a state statute (Amendment 1 to House Bill 2095). Yesterday the Justice Department faxed a letter to the Speaker of the TN House of Representatives, emphasizing the anticompetitiveness of prohibiting rebates to consumers. DOJ's press release notes that passage would "deny Tennesseans the opportunity of receiving cash rebates from real estate brokers when they buy and sell their homes . . . [thereby] imped[ing] real estate brokers from competing on price and force Tennesseans to pay more in real estate commissions."

CommercialAppeal.com reports that TAR's lobbying efforts have paid off. Last night the Tennessee legislature apparently passed HB 2095 (including Amendment 1), which is now headed for the Governor's desk.

I don't know the Governor's intentions. But price competition may be about to take a hit in Tennessee, and I'll be not a single member of the Tennessee legislature that voted for this amendment could point to a single piece of evidence that rebates harm buyers, sellers, or, for that matter, brokers. Here's the best rationale a TAR official could offer: "Unfortunately rebates, in too many cases, take the form of cash incentives that could be used to lure consumers into risky real estate transactions. And in some cases, you could see a rebate used as part of a down payment, which could amount to mortgage fraud," said J.A. Bucy, director of governmental relations for the Tennessee Association of Realtors." (emphasis added).