Texas Real Estate Sales Agent ExamReal Estate PracticeEasy
A group of real estate brokers in a small town agree to set a standard commission rate of 6% for all residential sales in their area. They also agree not to work with any broker who charges less than 6%. This type of agreement is a clear violation of which federal law?
- AReal Estate Settlement Procedures Act (RESPA)
- BFair Housing Act
- CSherman Antitrust Act
- DAmericans with Disabilities Act
Show answer & explanationAnswer & explanation
Correct answer: C. Sherman Antitrust Act
An agreement among competing brokers to fix commission rates and boycott those who don't comply is a classic example of price fixing and group boycotting, both of which are violations of the Sherman Antitrust Act.
Why the other options are wrong
- A. RESPA focuses on disclosures and preventing kickbacks in real estate transactions, not antitrust violations.
- B. The Fair Housing Act prohibits discrimination in housing, not anti-competitive business practices.
- D. The ADA addresses disability discrimination and accessibility, not commission rate agreements.
Sherman Antitrust Act - Price Fixing
The Sherman Antitrust Act prohibits agreements among competitors to fix prices, which includes setting standard commission rates in real estate, as it stifles competition.
- Federal law designed to prevent monopolies and promote competition.
- Price fixing is a per se violation, meaning no defense is allowed.
- Also prohibits group boycotts and market allocation.
Memory trick: Antitrust: No fixing prices, no boycotts, no dividing territories!