Legally speaking: Is it OK to lower some coop fees?
On May 13, 2013
By Peg Ritenour, OAR Vice President of Legal Services/Administration
I’m often asked what are the areas of real estate practice that receive the most questions on the OAR Legal Assistance Hotline. License law issues, disclosure, contract law, ethics and commission problems are consistently the source of most of the calls. Each week we’ll share a Q&A with you in the OAR Daily Buzz that we hope will help you as REALTORS. Our initial question involves commission issues…
Q: After a meeting at our local Board office, a few REALTORS were discussing a broker in our MLS who offers a much lower “coop” fee on his listings than most other brokers do. We decided that we’re going to tell this broker that we’re going to lower the coop fee we pay him to equal what he’s paying us. Is this ok?
A: Whoa! Does the term “antitrust” sound familiar to you?!
As most REALTORS know, both federal and state antitrust laws prohibits two or more brokers from setting what amount they will charge the public on their listings or for other services. But what is sometimes forgotten is that brokers can’t enter into an agreement as to what they will pay a competitor as a coop fee. Not only could this be considered price fixing, but it could also be found to be an illegal boycott. This occurs when two or more persons agree that they will not pay — or will pay a lower amount — to a competitor whose practices they don’t like. And if such discussions take place in your Board’s offices or at its meetings, it could possibly spell trouble for the Board as well.
Because of these antitrust laws, you and the other brokers in your Board should never discuss or enter into any type of agreements as to what you will all pay another broker. Instead, each broker must individually determine how much compensation they will pay another broker.
If you individually decide that you wish to pay this other broker the amount that he pays you on his listings, you can do this. The MLS rules specify that this must be communicated by sending the other broker written notice that you are offering him a different amount on your listings than is reflected in the MLS. As long as you make this decision unilaterally and notify the broker in writing, you should not run afoul of the antitrust laws, Code of Ethics, or MLS rules.