Edmund Hume, president of REBNY in the 1970s.
From the June issue: The federal government charged both the Real Estate Board of New York and an apartment building owner and management group of illegally setting commission rates and other fees in the sale of co-op units, 38 years ago this month.
The U.S. Justice Department’s antitrust division claimed in a civil complaint filed in Manhattan that for two decades, REBNY and a group called the Apartment Association conspired “to raise, fix and maintain the commissions and fees” for brokers. Such collusion violated the Sherman Antitrust Act, the agency said.
While the government claimed that the practice would prompt residential brokerages throughout the industry to adopt the same rates as these two industry leaders and create an unlevel playing field for consumers, REBNY defended its policy of publicly stating the percentages agents should be paid. At the time it was 5 percent for sales under $100,000 and a lower rate for more expensive apartments.
“The establishment of commission rates provides protection to the public and offers sensible guidelines to the real estate broker,” Edmund Hume, president of REBNY, was quoted as saying in the New York Times.
In November 1974, the two firms, without admitting guilt, signed an agreement with the government pledging to refrain from dictating commission rates or other fees. Today, REBNY says it does not establish commission rates, although it is generally 6 percent for residential apartment sales. [more]
