Regulation will cause significant harm to the competitive process and home buyers in Kansas
June 16, 2017
Kansas Real Estate Commission Three Townsite Plaza
120 SE 6th Ave., Suite 200 Topeka, KS 66603
Dear Mr. Wisner:
I write to provide the views of the Antitrust Division of the U.S. Department of Justice regarding proposed regulationK.A.R.86-3-32.
It is our understanding that the Kansas Real Estate Commission will hold a public hearing on K.A.R. 86-3-32 on June 19, 2017. The Department is concerned that this regulation will cause significant harm to the competitive process and home buyers in Kansas.
Kansas state law bars real estate brokers and other licensees from offering “rebates,” a .term that is not defined by statute.1 This ban on rebating part of a broker’s commission impedes real estate brokers from competing on price, which in tum causes home buyers in Kansas to pay more in real estate broker commissions.2
While Kansas law prevents brokers from offering rebates, Kansas real estate brokers do compete by offering home buyers gift cards that are redeemable at specified retailers, like home
improvement or furniture stores. These gift cards provide significant value to home buyers as they often amount to several hundred dollars’ worth of savings.
Proposed regulation K.A.R. 86-3-32 could significantly curtail this practice. As currently drafted, K.A.R. 86-3-32 would bar brokers and other licensees from offering gift cards and other similar gifts to home buyers, at least where the gift is agreed to by the broker and home buyer.3 If enacted, this rule could significantly impair competition, and increase the cost of purchasing a home for many home buyers in Kansas. Because Kansas law already prevents brokers from offering rebates, K.A.R. 86-3-32 could restrict one of the few remaining mechanisms by which brokers can compete on price.4
W e understand that the Kansas Real Estate Commission may believe that it has the authority to adopt K.A.R. 86-3-32 as part of a duty to clarify the Kansas law prohibiting rebates. To the extent that the Commission does have this authority, we encourage it to use that authority to adopt a definition that does not further restrain an important dimension of price competition that benefits home buyers in Kansas.5
If you have any questions or require further information, please do not hesitate to contact Jeff Vernon at (202) 598-8197.