Dennis Norman
In August 2009 there was a final judgment entered in the case United States of America vs Consolidated Multiple Listing Service, Inc. which stated “Consolidated (CMLS) can no longer deter low-cost or innovative brokers from competing in Columbia by charging a premium price for membership.” At the time CMLS was apparently charging an initiation fee of $2,500.
Last Friday, the United States file a Motion to Enforce the Final Judgment against CMLS alleging that they (CMLS) “has maintained the $2,500 initiation fee……even as it acknowledges that only a ‘portion’ of its initiation fees relates to its costs in adding a new member and that the remainder relates to ‘other expenses’ it incurs. ” The motion refers to the testimony of CMLS employee that was responsible for CMLS’s application process and an analysis of CMLS’s costs by its consultant which indicated the $2,500 fee exceeds the cost of adding a new member “by more than $2,000″.
The United States has requested that the Court order CMLS “to reduce its excessive initiation fee and refund to recently admitted members the amount CMLS overcharged them.”
In the it’s conclusion of the motion, the United States states the initiation fee should be reduced to $105.10 based upon expenses of adding a member that were identified by Matthew Cohen of Clareity Consulting who CMLS hired after the judgment to determinate what their initiation fee should be. Mr. Cohen actually came up with a “cost” fo $3,504.75 but the United States states “based on Mr. Cohen’s estimates, CMLS appears to incur only $105.10 in costs when it adds a new member.” The motion goes on to say “The fundamental flaw in Mr. Cohen’s approach is that it includes expenses that CMLS incurs even if no new members join CMLS. These costs obviously are not ‘incurred by CMLS in adding a new Member’….The Final Judgment allows CMLS to collect fees from existing members to cover these unrelated costs but prohibits imposing them on new applicants as the price for admission.”
I first wrote about the final judgment in this matter back in September and offered the following editorial which still reflects my opinion on this:
This post is not to single out CMLS or pick on them, it is to remind professionals in the real estate industry that we have to allow new business models and approaches to the real estate business to participate with, and compete with, traditional style brokerages on a level playing field. Clearly the DOJ and FTC are going to protect the right of new and/or alternative business models to compete with traditional business models on a fair and level playing field.
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