Discount Home Brokers Can Now Access South Carolina Market
Discount home brokers, fee-for-service brokers and online brokers are now allowed to compete with full-service real estate brokers in South Carolina such as Consolidated Multiple Listing Services Inc. after the U.S. Justice Department agreed to a settlement with CMLS.
CMLS was sued in 2008 by the Justice Department for anticompetitive practices. Non-traditional brokers accused CMLS, which is run by traditional brokers, for establishing rules that prohibited fee-for-service brokers from working as realtors in the market.
Under the settlement which will be enforced for 10 years, online brokers, discount brokers and fee-for-service brokers can now become members of the CMLS as long as they are licensed in South Carolina.
The MLS is also required to reduce its initiation charge for new members. Nontraditional brokers claimed that they fear losing the $5,000 charged by CMLS for initiation because after paying the fee, they are made to undergo intimidating interviews conducted by full-service brokers who have all the rights to reject their application and forfeit the $5,000 they paid.
The Justice Department stated that the $5,000 initiation fee was 5 times higher than the fees charged by other listing services in the state. CMLS later lowered the initiation fee to $2,500, but the fee is still high according to non-traditional home brokers.
In response, CMLS lawyer Edward M. Woodward Jr. said that the cost of initiating a new MLS member is higher than the $2,500 fee, as calculated by a CMLS consultant.
In addition, nontraditional brokers are no longer required by CMLS to maintain offices in South Carolina. The Justice Department argued that allowing brokers to run their businesses online from their homes will lower costs and will enable them to reduce their fees and benefit customers.
CMLS will also repeal its rule of requiring brokers to actively get involved in the marketing and closing of listings. The Justice Department explained that this rule restricted fee-for-service agents who charge lower fees for specific services only.
Another restriction lifted was the prohibition of brokers from signing exclusive agency agreements with sellers who plan to sell their homes without paying commissions.
The settlement with the Justice Department requires CMLS to submit to the department the minutes of its board and committee meetings and changes in its rules. CMLS is also required to provide copies of the new agreement to all members and to all home brokers who have applied for membership in the last 5 years.
