Opinion ID: 543769
Heading Depth: 3
Heading Rank: 2

Heading: The Real Estate Community's Reaction to Market Force

Text: 8 For some time after Market Force began operation, other real estate firms treated Market Force in an inconsistent manner with respect to splitting commissions. Some firms paid a full 40% commission and others paid nothing. Mayfair Homes was the first real estate firm to adopt a concrete policy, deciding in September 1987 not to share any part of its sales commissions with Market Force. At the same time, Wauwatosa Realty Company (Wauwatosa), a large real estate firm in Milwaukee and throughout Wisconsin, occasionally split commissions and occasionally refused entirely to enter into sales contracts with Market Force buyers. 9 Before formulating a policy about splitting commissions with buyers' brokers, Joann Glawe, Wauwatosa's general sales manager, contacted Mayfair Homes and inquired about its policy. Wauwatosa subsequently issued its policy on October 23, 1987. Its policy was to pay a buyers' broker the same fee it paid to out-of-state or non-MLS brokers who refer a buyer to Wauwatosa. The district court noted that:According to her affidavit, Ms. Glawe wrote the Wauwatosa policy with specific business reasons in mind: (1) Wauwatosa was paying the same 20% referral fee to out-of-state and non-MLS brokers who referred buyers to Wauwatosa; (2) Wauwatosa might have to pay a selling agent in a transaction even though a buyers' agent was involved, where, for example, a selling agent held an open house and the buyer represented by a buyers' agent toured the home; (3) Wauwatosa pays its listing agents more when a buyers' agent but not a selling agent is involved, on the theory that the listing agent must take on some of the duties of a selling agent, such as answering questions on behalf of the seller; and (4) buyers' agents have lower costs than selling agents because they do not list homes in the MLS. 10 The Market Force, Inc. v. Wauwatosa Realty Co., 706 F.Supp. 1387, 1390-91 (D.Wis.1989). Wauwatosa mailed a sheet describing its policy to all brokers listed in the MLS book--about 250 firms. Ms. Glawe testified at a deposition that she undertook this mailing following a conversation with Peter Shuttleworth, director of the MLS, who told her that other brokers other than just buyer brokers were [acting as buyers' brokers] and it might be well to let everyone know. Id. 11 Coldwell Banker, which lists the second highest quantity of homes in Milwaukee after Wauwatosa, issued its policy on November 11, 1987, after reviewing Wauwatosa's policy. It set its commission rate at 20% of the total commission, a figure its chief operating officer may have believed mistakenly was the same as Wauwatosa's. 2 It also mailed its policy to all MLS brokers. In subsequent months, several other firms issued policy statements about sharing commissions with buyers' brokers. The rates were the same as those offered by Wauwatosa or Coldwell--either 10% or 20% of the total sales commission. All the firms that eventually adopted commission policies for buyers' brokers together represented about 31% of the annual listings of homes for sale in the Milwaukee MLS. 12 Market Force had several negative experiences with other brokers. Several sales were lost due to intransigence about sharing commissions. R.52 at 2; R.54 at 7. One Market Force buyer was told not to work with Market Force and that she would not get the home she was viewing unless she worked with a sales broker instead of Market Force's agent. R.87 Ex. 15 (McGrew Affidavit). At one closing, an agent for Four Seasons Realty told the president of Market Force that everyone is against you and that Market Force should quit business. R.54 at 10. 13 Market Force advertised in local television and print media. In November 1986, as a result of other real estate firms' complaints, the editor of a magazine wanted to remove Market Force's advertisement. The other firms apparently threatened to remove their own advertisements from the magazine if Market Force's advertisement was not removed. R.54 at 5. 3 Several complaints also were made to the executive director of the MLS. 14 Market Force decided not to enforce its contracts with buyers-clients that would entitle Market Force to collect from them the difference between the amount actually paid as commissions by other brokers and 2.4% of the sale price (the amount guaranteed to Market Force in its contract with its buyers-clients). However, it paid its agents the fee they would have received if Market Force had received 2.4% of the sale price. Despite the fact that Market Force absorbed this difference, all of its agents eventually left. The company ceased operations in the fall of 1988.