SAFEGUARDS

Growing BusinessSAFEGUARDS

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  • Risk Management for Real Estate Firms

    Game Plan

    In-Depth

    Per Se Antitrust Actions

    There’s a lot of competition in local real estate markets and that can sometimes lead to anti-competitive actions on the part of overzealous agents. The federal government has identified per se offenses (anticompetitive actions that do not conform to federal antitrust statutes) in the real estate industry, which include, but are not limited to:

    • Fixing prices or commissions. If two or more brokerages agree to set pricing or commission rates, they are in violation of antitrust laws and penalties can be severe.
    • Controlling the length of listings. Any agreement to limit the minimum or maximum listing time frame for a property may be a violation.
    • Agreeing as a group to treat a competitor differently. If two or more brokerages decide to play by different rules when collaborating with a certain competitor, it’s likely that would be a per se offense.

    Mitigation Measures

    • Antitrust laws are often unclear and confusing, but violations can result in significant financial damages and criminal or civil consequences. Anti-competitive actions like those listed above should be fairly obvious. Basically, treat everyone the same and don’t play fast and loose with transaction terms.
    • Become familiar with antitrust laws as they relate to real estate issues.
    • Get insurance. At a minimum, it is prudent for any small business to have a Business Owner’s Policy. However, because there are unique risks that come with selling and managing property, realtors would be wise to consider additional coverages. This Coverage Identifier can help you learn about the types of insurance real estate firms typically use to protect their businesses.