The notion that real estate commissions are fixed and unalterable, a notion still perpetuated by use in some offices of such terms as ”the standard 6,” comes from the days when they actually were set by local real estate boards.
Before the mid-1950s, many local boards of Realtors had mandatory commission schedules which they imposed on their members, according to Laurene Janik, general counsel for the National Association of Realtors.
After a Supreme Court decision ruled that setting fees in such a manner constituted price-fixing in violation of antitrust strictures, the practice was not abandoned totally, she said.
”There was some carryover,” Janik said. While boards no longer published a fee schedule that could be enforced, members continued to act as if a schedule were fixed, she noted.
During the mid-1970s, however, the U.S. Justice Department cracked down on commission-fixing. In one Maryland case, a broker was sent to jail after making statements at a Board of Realtors meeting of his intent to change his commission schedule.
”Many of his competitors did change rates, so there was a strong inference” that he had been engaging in price fixing, Janik said.
The widespread publicity given that case not only prompted brokers to give at least lip-service to commission flexibility but also made them extremely hesitant about talking publicly about their commissions.
This is especially true of officials of real estate groups.
”This I wouldn`t touch with a thousand-foot pole,” said Frank Williams, president of the Chicago Board of Realtors, when asked to comment on commissions. ”Call me about anything else.”
The apprehension is so great that sales agents are advised not to discuss commissions over lunch or at other social occasions.
If the subject comes up, Janik said, ”we tell them to spill a glass of water and leave. They should spill the water so that everyone remembers they left.”