The Illinois Association of Realtors is opposing state legislation that seeks to restrict cash rebates and other rewards offered by real estate professionals to unlicensed persons who engage in real estate transactions.

The U.S. Department of Justice has taken legal action in other states to undo similar restrictions that prevent real estate agents and brokers from rebating a portion of the money they receive in a home sale to consumers, and the department is aware of the proposed Illinois legislation, a spokeswoman said Tuesday.

House Bill 4313, proposed by Illinois state Rep. Robert S. Molaro, D-Chicago, seeks to amend the state’s Real Estate License Law Act of 2000 to state that “no licensee shall give or pay cash rebates, cash gifts or cash prizes to an unlicensed person who is a party to a contract to buy or sell real estate.” The legislation would allow licensees to offer compensation “including prizes, merchandise, services, rebates, discounts or other consideration to an unlicensed person who is a party to the least of real estate,” as long as that offer complies with other provision of the existing act, according to the bill text.

Steve Bochenek, legal counsel for the Illinois Association of Realtors, said the association’s executive committee took a vote to formally oppose the legislation. The association’s opposition to the bill has been communicated to members, he also said, and to the bill’s sponsor.

“We think it may put some of our members at a disadvantage because it only applies to licensees,” he said, as it would allow builders and developers to offer rebates and other cash rewards to consumers that Realtors, as real estate licensees, could not offer.

Also, there are situations in which a home buyer may need some assistance to complete a sale transaction, he said. “Sometimes licensees kick in a little bit” to complete deals, he said, and “this would preclude them from doing that.”

“I’ve called my elected officials … to find out why was it introduced, what purpose is it going to serve. I get nothing out of anyone,” he said. Brynelsen said he has offered rebates to buyers for about four years. “I think (rebates are) a good thing. I’m not looking to hurt anyone.”

He said he expects that consumers would be outraged by the proposed legislation if they fully understood its impacts. “This is going to hurt a lot of people,” he said, and he would be forced to change his business model.

“Some of the people who I’ve done business with — they absolutely could not have bought a house had it (not) been for the rebate that I offer,” he said, adding that the timing of the legislation is horrible given the slowdown in the residential real estate market. “To take it away in this market … could they do anything more to destroy this market? It really is tragic.”

Glenn Kelman, CEO for Redfin, a company that offers rebates to buyers, wrote about the proposed legislation in the company blog — Redfin has plans to expand its operations into the Chicago area. The blog noted that Molaro and a co-sponsor of HB 4313, state Rep. Angelo Saviano, R-River Grove, both received contributions from the Illinois Association of Realtors in the 2006 election cycle.

The bill, introduced Jan. 9, was assigned to a committee on Feb. 13 and a staff member for Molaro said it will not likely be heard in committee this week.

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