TAR Earns Pyrrhic Victory
Greg was the first to post the news, courtesy of the Nashville Tennesean:
Gov. Phil Bredesen has signed a bill reinstating a ban on cash rebates for home sales and other real estate transactions, despite opposition from consumer advocates and federal antitrust officials.
The good news is somewhere there’s a lawyer or two who will make some money when this new law is challenged in court. And it will be. Make no mistake.
Regardless of whether the law stands, it’s a Pyrrhic victory at best. Victory over those dastardly companies with alternate business models will come with a steep price in public relations.
I’m not a purveyor of the rebate model but I’m also not an opponent. I’m confident enough in the service I provide that I don’t feel I need to pay my clients to work with me. And so I do not and have not viewed real estate models based on a rebate as a threat.
Even if they were, however, the solution isn’t legislation. If the whims of the market are such that such a model were to become dominant, I would have the choice either to adapt or change careers. So be it. By working to ban the rebate model, all the good folks at the Tennessee Association of REALTORS has done is give that particular more credence and legitimacy than it may deserve.
Rebate models only are profitable when business is performed in bulk because of the considerable overhead involved in real estate. Rare is the month where another check is not being sent somewhere to cover board dues, MLS access, website access, marketing or whatever else may arise.
We’re not in a market where bulk exists. Even if we were, if the best response TAR can come up with is to attempt to eliminate its competition through legislation, the group clearly is in dire straits.
Survive or fail on the service you provide. Don’t make yourselves look foolish asking for government protection of your business.
More reading:
DOJ + Protectionism = More Bad Publicity for Realtors
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Mr. Dalton, I enjoyed your post, particularly the general attitude it conveyed. Of course while you say that you are not an opponent of the rebate model, and that you do not and have not viewed real estate models based on a rebate as a threat, your reference to “those dastardly companies with alternate business models” perhaps suggests otherwise.
Regardless, do I understand correctly that it is your personal opinion that TAR supported the bill because it “eliminate[d]” some of the (price) competition its members were experiencing?
Hi, Michael … the “dastardly” comment was pure sarcasm for emphasis. There’s no right model, no wrong model.
I don’t see rebates being eliminated because I’d be stunned if this isn’t challenged and quickly. If the challenge is upheld, though …
NAR and its state associations have this nasty habit of trying to eliminate competition through some rather questionable means rather than winning our on a purely competitive basis. The continuing DOJ v. NAR case is another example.