The competition for your business has become even more furious in recent years, with real estate companies offering various levels of service for the plethora of customer/client types out there.

Whether you want bundled full services from a pre-approval mortgage, home purchase/sale and settlement, or if you just want to get your home in the MLS, it's pretty easy to find the company that will provide you the level of service you desire. However, state legislatures -- which govern real estate license laws across the country -- are starting to bring the hammer down on its licensees to ensure consumers receive a minimal level of service.

A recent report from the Realtor Association Executive publication, has addressed many of these issues for its members, who are the local and regional trade association reps for the Realtor industry. In its latest issue, F.P. Maxson, an associate counsel for the National Association of Realtors, states that limited service agreements, "in which the listing broker offers no services other than placement of the listing in the multiple listing service, have left many real estate professionals in an ethical quandary."

It usually goes something like this: a homeowner wants to sell his house himself, however, recognizing the power of the regional multiple listing system, he wants his house listed there. Therefore, he solicits the assistance of a limited-services broker. This is generally a broker who uses a menu-based business model: you get what you pay for -- nothing less, nothing more. The consumer pays for each step of the process, if they want it: MLS entry, contract negotiation, signs, marketing, buyer follow-up, contract performance, monitor fair housing compliance, etc., etc.

The challenge in the industry, according to NAR, is that since "homesellers who employ these limited-service brokerages are essentially representing themselves in the transaction... Often, when they encounter difficulties in the transaction process (such as an uncertainty regarding how to handle multiple offers), they ask the buyer's broker for free advice."

Maxson writes that real estate professionals say "they frequently are asked to assist the sellers in completing the transaction. To do so could leave them exposed to claims of dual agency. On the other hand, choosing not to assist the sellers places the transaction in jeopardy."

It's quite a quandary. And one that many legislatures are deciding to enter. Illinois, Texas, and Michigan have been the first to begin a minimum service requirement challenge to its licensees.

Illinois' measures were passed into law last year, while Texas and Michigan are proposing changes. All three require that if an agent is going to list a property, then there are at least three points of service that must be provided:

  • Accept and present all offers/counteroffers.
  • Assist client in developing, communicating, and presenting all offers and counteroffers.
  • Answer the client's questions relating to the offers and counteroffers.

The concept of a minimum level of service is growing, Missouri's Realtors are now considering authoring legislation modeled after Michigan's as their legislature gears up for this year.

The rationale behind a minimum level of service is all about raising the bar of professionalism, according to George Stephens, 2003 Chairman of the Board for the Texas Association of Realtors. "This is purely a consumer issue that has nothing to do with commissions or fees," says Mr. Stephens. "Whether a broker is charging a flat fee or a commission, he or she should be required to deliver at least those three services."

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