Tennessee Home Buyers Getting The Shaft

May 17,2007

Thanks to legislation just passed by the Tennessee legislature, many home buyers may have to pay an extra $4.000 to buy a home if Governor Phil Bredeson signs the legislation. In most of  the country home buyers are allowed to use specialized real estate brokers who rebate part of their sales commission back to the home buyers. The rebates, which are as much as 2% of the home’s selling price, can amount to more than $4,000 on a typical U. S. home, which sold for an average of more  than $200,000 in 2006.

These rebates have worked well all across the country.They are making it possible for lower income and  minority first time buyers to achieve home ownership and are saving other buyers significant amounts of money. There have been no consumer complaints about these rebates, only substantial  savings. Although traditional  real etsate brokers are supporting this legislation in order to protect their high commissions, we don’t believe that is sufficient justification for prohibiting home buyers from saving money.

Tennessee House Bill 2095, passed by the House on May 14, and Senate Bill 1160, passed previously, would prohibit brokers from rebating real estate commissions back to Tennessee home buyers . Both were passed despite an advisory from the Department of Justice to House Speaker Naifeh advising that the legislation is anti – competitive.

Ironically, the House vote also came the day after a May 13th CBS 60 Minutes  segment on real estate competition that documented the potential savings for  consumers through real estate commission rebates, as well as other efforts by traditional real estate brokers to  protect their commission revenues.

The American Homeowners Grassroots Alliance and the Consumer Federation of America have written Gov. Bredeson, urging him to veto this legislation, which will take an average of as much as $4,000 out of the pockets of Tennessee home buyers for no good reason.

Bruce Hahn
President
American Homeowners Grassroots Alliance

Note: Governor Bredeson signed the bill into law:   PLEASE READ