Many people believe that in order to be a real estate agent, you need to be a "Realtor". This is incorrect.
A "Realtor" is simply a person that is a member of a trade association or lobbyist group. The most well known real estate trade association and lobby group is the National Association of Realtors. In Vermont, we also have other real estate trade associations and lobbyists, including the Vermont Association of Realtors and local Realtor associations.
The primary goal of these real estate trade associations and lobby groups, like any trade group or lobbyist, is to promote the interests of its members. The overwhelming majority of the members of these associations are real estate firms that offer traditional models of brokerage services based upon a percentage of the sales price. These firms typically charge between 5-6% of the sale price as their fee.
Because the majority of members and those making the policy decisions for the "Realtors" associations support a 5% or 6% commission based model, their policies, practices and decisions are aimed at preserving this model.
While these trade associations have done a very good job of marketing themselves and conveying concern for the interests of buyers and sellers of real estate, they actually care much more about ensuring that their members continue to profit enormously from buyers and sellers of real estate by preserving the 5-6% commission based model.
Because their primary goal is to ensure that the 5-6% commission based model continues to enjoy a market dominance, they must take action against any threat to that market dominance. Flat fee real estate services such as ours represent the greatest threat to this market dominance. While it is possible that a decade ago a business like ours would not have been competitive, thanks to the great advances in technology and the internet, a business like ours is now not only competitive but represents the wave of the future in real estate brokerage services.
Flat Fee Real Estate was a member of the National Association of Realtors, the Vermont Association of Realtors and the Northwestern Vermont Board of Realtors from 2008 until late 2011. During this period, there were several instances where it became clear that these associations had no interest in having Flat Fee Real Estate as one its members or protecting the alternative commission model we were promoting. In fact, at one point they demanded that we remove a blog post regarding real estate agent pay from our website because they were clearly concerned that the public would be alarmed by the outrageous commissions of "Realtors" in Vermont.
It was after the "Realtors" Association demanded that we remove this posting that we decided to voluntarily cancel our membership in these trade associations. We could no longer in good conscience be a member of a lobbyist group like the National Association of Realtors. Like many lobby groups today, the National Association of Realtors is designed to protect the business interests of its members to the detriment of the pulic and Flat Fee does not believe that the public's interest should take a back seat to those of lobbyists.
In addition to canceling our membership, we also ceased using the forms created by these trade associations. The Purchase and Sale Contract that members of the Vermont Realtors Association utilize was drafted by an attorney for the Vermont Realtors Association. While most Realtors do not bring it to their clients attention, the Contract actually includes two provisions which limit the liability of the Realtors even though the Realtors are not a party to the contract. We believe these provisions, at a minimum, violate the agents fiduciary duty and loyalty to the client and may even represent a violation of the State of Vermont Consumer Fraud Act. This is yet another example of the Realtors Association putting the interest of its members above those of buyers and sellers in Vermont.
Flat Fee believes deeply in the spirit of healthy business competition in Vermont and cannot in good conscience be a member of any organization which cares more about the interest of its members than it does in ensuring business competition.
To learn more about cases where "Realtor Associations" have been accused by the Federal Trade Commission of restricting competition visit the FTC's Website On Real Estate Competition