States That Prohibit Realtor Fee Negotiations

The 10 states listed below have made it illegal for home buyers to negotiate their own Realtor’s fees. In those states, the buyers Realtor’s fee is fixed by the seller. The buyer has no say in how much their own Realtor gets paid and the seller’s broker is actually in a position to pay the buyer broker a “bonus” or a bribe. The only possible explanation for such a bonus is to improperly influence the advice and counsel the buyer’s broker provides (the definition of a bribe).

The states that prohibit the negotiability of buyer broker’s fees directly harm consumers and artificially increase the costs of housing. This petition is requesting that the 10 states listed below repeal the anti-competitive laws on their books and make it possible for buyers to have a say in how much their Realtors get paid.

In the 40 other states, buyer brokers can compete on price. In those states, buyer brokers are allowed to share part of their fee with their buyer clients in effect making their fee negotiable. It facilitates full disclosure of buyer broker fees and an upfront negotiation of those fees.

Discount buyer brokers can save homebuyers thousands of dollars by sharing part of their fees with their buyers. We know of many discount brokers who actually give back half their fee. We have found that many of these discount brokers have amazing credentials and offer full service (some are even attorneys). These discount brokers count on the extra volume to make their money. In the 10 states on the below list, it is illegal for discount buyer brokers to operate.

Buyer broker rebates are encouraged by the United States Department of Justice because rebates are the only way for their fees to be negotiated. The 10 states listed below have no legitimate interest in eliminating fee competition other than to protect the profits of real estate firms.

A Little History

In 2005, after suing Kentucky, the US Department of Justice reached a settlement with the Kentucky Real Estate Commission making consumer rebates legal there. Following that settlement, Montana, New Jersey, South Dakota and West Virginia legalized rebates to consumers. The rest of the country already had laws on the books that permitted buyer brokers to share part of their fee with their own clients. Here is CAARE’s letter to the New Jersey Senate encouraging them to change their laws.

Click here to sign the petition.

Here are the states (click on them to see specific information from the Department of Justice):