FTC/DOJ take position on new Michigan minimum service bill

“The FTC and DOJ continue to believe that no minimum-service legislation is necessary.”

-May 30, 2007 FTC/DOJ comments on Michigan HB 4416 at 5.

The Federal Trade Commission has approved the filing of joint FTC/U.S. Department of Justice comments with Michigan Governor Granholm regarding HB 4416, which relates to minimum service requirements for real estate brokers in Michigan.

The FTC’s press release notes that HB 4416 “is a revised version of 2005's HB 4849, which would have required Michigan real estate professionals to provide a specified array of services, requiring home sellers within the state to buy real estate brokerage services they may not want or need.”

While HB 4416 also requires real estate professionals to provide specified services, it allows consumers to waive the broker’s help in acceptance, presentation, development, and communication of offers and counteroffers; negotiations; and closings. However, the agencies advise “that there is still not evidence that any form of minimum-service law is needed to protect the state’s consumers.”

The comments also address a broker advertising provision contained in the bill, which provides that

A REAL ESTATE BROKER OR REAL ESTATE SALESPERSON REPRESENTING A SELLER UNDER A SERVICE PROVISION AGREEMENT SHALL NOT ADVERTISE THE PROPERTY TO THE PUBLIC AS "FOR SALE BY OWNER" OR OTHERWISE MISLEAD THE PUBLIC TO BELIEVE THAT THE SELLER IS NOT REPRESENTED BY A REAL ESTATE BROKER.

The comments include an interesting analysis of how this provision could affect yard signage. Bottom line, “[t]he FTC believes this provision could impose costs on certain non-traditional brokers, hindering their ability to compete.” As an aside, this provision reminds me some of recently enacted NAR MLS Policy Statement 7.87, which relates to potential restrictions that could be imposed by MLSs upon the upload of listings to websites like Realtor.com (e.g., certain listings where "the seller displays on the property a 'For Sale By Owner' sign or another sign or notice indicating that the seller is soliciting direct contact from buyers.")

The comments also address a concern relating to a provision that could require a broker acting under a service agreement to furnish, or cause to be furnished, a closing statement.