Broker Duty to Clients: Why States Mandate Minimum Service Requirements
Since 2004, ten U.S. states have enacted laws that mandate real estate brokers to provide real estate consumers with a minimum level of services. The federal government and the academic literature suggest that such state laws are a result of anti-competitive industry collusion, and serve no consumer protection justification. This paper attempts to determine the factors that led states to adopt minimum service requirements, despite significant federal opposition. The analytical structure employs hazard models, using a unique set of economic and institutional attributes for 50 U.S. states from 2000 to 2007. Contrary to initial expectations based on the literature, our results indicate that both strength of a state.s Realtor association and broker membership on real estate licensing boards decrease, rather than increase, the likelihood of state adoption of broker minimum service requirements. Factors that do increase the likelihood of adoption include higher state licensing complaints and a democratically controlled state legislature.
|Date of creation:||Apr 2009|
|Date of revision:|
|Note:||Authors acknowledge helpful comments from John Clapp. All remaining errors are ours.|
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