What violation occurs if brokers discuss setting a standard commission for all raw land listings?

What violation occurs if brokers discuss setting a standard commission for all raw land listings?

• A. Not guilty due to office policy
• B. Violation of REG Z
• C. Violation of Sherman Antitrust Act
• D. Violation of RESPA

Answer: (C)

Setting a standard commission for all raw land listings can lead to a violation of the Sherman Antitrust Act, which prohibits practices that restrain trade or commerce. This law is designed to maintain competition in the marketplace. When brokers discuss or agree on commission rates, they are effectively colluding to set prices, which can diminish competition among brokers and potentially harm consumers by eliminating options for lower commission rates. By establishing a standard rate, they restrict the ability of other brokers to set their own fees based on their business strategies and market conditions. Other options, while related to different regulatory frameworks, do not pertain to the issue of price-fixing among brokers. For instance, REG Z (Truth in Lending Act) deals primarily with credit disclosures and does not address commission rates. RESPA relates to the disclosure of settlement services and is focused on real estate transactions rather than commission structures. As such, the correct identification of the Sherman Antitrust Act highlights the importance of competitive practices in real estate.

Setting a standard commission for all raw land listings can lead to a violation of the Sherman Antitrust Act, which prohibits practices that restrain trade or commerce. This law is designed to maintain competition in the marketplace. When brokers discuss or agree on commission rates, they are effectively colluding to set prices, which can diminish competition among brokers and potentially harm consumers by eliminating options for lower commission rates. By establishing a standard rate, they restrict the ability of other brokers to set their own fees based on their business strategies and market conditions.

Other options, while related to different regulatory frameworks, do not pertain to the issue of price-fixing among brokers. For instance, REG Z (Truth in Lending Act) deals primarily with credit disclosures and does not address commission rates. RESPA relates to the disclosure of settlement services and is focused on real estate transactions rather than commission structures. As such, the correct identification of the Sherman Antitrust Act highlights the importance of competitive practices in real estate.