PSI Virginia Real Estate Practice Exam

Which of the following practices is prohibited under Sherman antitrust laws?

1. Negotiating purchase prices

2. Price-fixing

3. Setting loan-to-value ratios

4. Allocating property taxes

The correct answer is: Price-fixing

Price-fixing is prohibited under Sherman antitrust laws because it is a practice that restricts competition. The Sherman Act aims to promote competition and protect consumers by preventing businesses from colluding to set prices rather than allowing market forces to determine them. When companies engage in price-fixing, they set prices at a predetermined level, which undermines competition and can lead to inflated prices that harm consumers. Negotiating purchase prices is a standard practice in real estate and does not violate antitrust laws, as it involves individual negotiation between parties rather than collusion. Setting loan-to-value ratios is typically a regulatory requirement or a lending practice and does not involve collusion among competitors. Allocating property taxes is generally a function of government regulation rather than an agreement among businesses, making it distinct from antitrust concerns. Therefore, price-fixing stands out as the clear violation of the Sherman antitrust laws.