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  • Writer's pictureMike Brandly, Auctioneer

Auctioneers, NAR, and the DOJ

It’s not 1908 anymore. Auctioneers engage real property sellers and have a choice — pay exorbitant fees to list the property in the “local trade association database“ or use those same funds (likely less) to market the property themselves.

We’ve sold real property at auction all over our home state, and 4 neighboring states. We once paid 13 different “local trade associations” dues to get property listed in the “local” database. For auctioneers who have this same issue today, it’s absurd these expensive local databases aren’t all part of one such database nationwide — with only one single membership fee.

Am I the only one who believes this? Apparently not as with any number of “nationwide” databases available (as apps on your mobile device) currently providing listings and otherwise property information. Can’t everyone just admit this is a far better system? Yes, these platforms get their data from MLS, so it appears even MLS sees the benefit — so why do these local expensive databases still exist?

They exist to fund the organizations needed to maintain control of (and profit from) a clearly antiquated system. It’s as simple as this — if the United States real estate agent industry truly wants to move into the 21st century, become that preferred country-wide system for agents (and possibly others.) If there’s no local database we could cut massive overhead costs which would benefit members with much lower fees.

To argue that the association model in the United States with independent local broker marketplaces is the best value is disingenuous. It’s not the “best value” nor is it the “most efficient.” Further, many believe sellers should be paying their broker, and buyers should be paying their broker — instead of purposely shrouding the buyer broker’s commission within the seller’s commission.

I’m reading … that our current system is the best in the world? Is our current system better when compared to other countries? Possibly, but does that make it the best it can be? Auctioneers in the United States largely don’t care if this system is better than other systems — and would argue our system can vastly improve to serve the current environment.

Further, if real estate brokers and subagents really want to do better, and be “loyal” to their clients, they should advocate that “pocket listings,” “coming soon” and “dual agency” are deemed illegal nationwide. None of these three common practices favors the client and instead benefits the agent at the expense of the principal, yet they remain widespread in the real estate industry.

Yes, indeed many auctioneers charge buyer’s premiums — which often substitutes for part or all of the seller’s commission. Is this the same thing as traditional buyer-brokerage compensation? It is different, as the fee is fully disclosed to the seller and sellers often receive a fixed discount of their commission.

This is an important case with the United States Department of Justice regarding the real estate trade association and some large brokerages (most all brokerages) and it appears possibly — as a result of recent multi-million-dollar settlements — things are already improving for the consumer in real property transactions and for auctioneers, as well.

Lastly, if ultimately, sellers pay listing brokers, and buyers pay buyer-brokers, what do we need the current system for? Auctioneers, listing brokers (and subagents) need to market property, and (potentially auctioneers,) buyer-brokers (and subagents) need to find property — and it makes sense to make that process efficient and affordable — which it is neither at the moment.

Mike Brandly, Auctioneer, CAI, CAS, AARE has been an auctioneer and certified appraiser for over 30 years. His company’s auctions are located at Mike Brandly, Auctioneer, Brandly Real Estate & Auction, and formerly at Goodwill Columbus Car Auction. He serves as Distinguished Faculty at Hondros College, Executive Director of The Ohio Auction School, and an Instructor at the National Auction Association’s Designation Academy and Western College of Auctioneering. He has served as faculty at the Certified Auctioneers Institute held at Indiana University and is approved by The Supreme Court of Ohio for attorney education.

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