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#140074 - 05/11/07 01:14 AM Referral, what is legal or illegal???
zippys90 Offline
Junior Member

Registered: 05/10/07
Posts: 1
I am a angent in CA...I have solicited my business to different lenders and have always be thankful for a referral by giving a referral fee (or best put as finder fee)...one office in particular I give 20% to the broker who is then suppose to give a fee to the LO for the referral because the broker does all the marketing...well our first deal together, was a self-gen for this LO but I still gave the broker the 20% referral, hoping they would pay the LO accordingly for the self-gen butthey never paid a fee to the LO. yesterday, i emailed the all the partners and cc'd the LO has to the breakdown of the fee for tax purposes and one of the owners then called me upset because I cc'd the LO, my response was I thought the LO got paid so if he knew then he would be able to provide me the information I was requesting...basically he felt that he shouldn't have paid the LO the referral fee because a couple of months ago he didn't do a loan so he was basically working at his office for free. Now he called the LO into the office and talk to him about kickbacks. (I can go on about our conversation but I will spare all the nonsense). WHAT IS APPROPRIATE IN THIS SITUATION, I TOTALLY FEEL WHAT TRANSPIRED IS SO UNETHICAL BUT PLEASE HELP ME IF I'M WRONG?????

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#140077 - 05/11/07 01:20 AM Re: Referral, what is legal or illegal??? [Re: zippys90]
staggart Offline
Veteran Member

Registered: 09/18/04
Posts: 930
Loc: Idaho Falls, ID, USA
Uhhhhhhhhh . .

Under RESPA, it is utterly illegal for a real estate agent to pay or be paid a fee by a lender for referring business to that lender. It is a federal crime with both heavy fines and jail time attached.

If that is what you have been doing, you need to go have a very frank conversation with your broker. Then, you probably need to get into an attorney.

_________________________
Steve Taggart
Broker
CENTURY 21 Advantage
Southeast Idaho's Real Estate Leader(sm)
The GOLD Standard(sm)
400 W. Sunnyside Road
Idaho Falls, ID 83402
(208) 524-2121
http://www.IFhomes.com
http://www.IFreschool.com
staggart@ida.net

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#140089 - 05/11/07 02:35 AM Re: Referral, what is legal or illegal??? [Re: staggart]
Merkaba Offline
Veteran Member

Registered: 03/20/07
Posts: 1103
Loc: South Carolina
yea, in SC the only person you can pay is another licensed RE broker.
_________________________
Realtor Extraordinaire, ABR, E-Pro
Bulk REO Investments

Keller Williams Realty
South Carolina

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#140090 - 05/11/07 02:41 AM Re: Referral, what is legal or illegal??? [Re: Merkaba]
staggart Offline
Veteran Member

Registered: 09/18/04
Posts: 930
Loc: Idaho Falls, ID, USA
Remember, RESPA is as federal statute.

_________________________
Steve Taggart
Broker
CENTURY 21 Advantage
Southeast Idaho's Real Estate Leader(sm)
The GOLD Standard(sm)
400 W. Sunnyside Road
Idaho Falls, ID 83402
(208) 524-2121
http://www.IFhomes.com
http://www.IFreschool.com
staggart@ida.net

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#140091 - 05/11/07 02:41 AM Re: Referral, what is legal or illegal??? [Re: Merkaba]
changeagent Offline
Veteran Member

Registered: 04/14/06
Posts: 602
Loc: Universe
I think this is a great example of what just opening the floodgates and allowing people to become agents without having the slightest idea about rules, regulations, ethics or laws is creating in the marketplace.

WHY does this agent not know the facts about what he/she has been doing? (And what about the receiving parties?)

I am just sick of hearing of these slick tactics - no wonder it is so difficult for people who play by the rules to get ahead.
_________________________
You're kidding,right?

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#140106 - 05/11/07 04:11 AM Re: Referral, what is legal or illegal??? [Re: changeagent]
TPA_sold Offline
Member

Registered: 04/22/07
Posts: 22
Loc: Tampa, FL
Originally Posted By: changeagent
I think this is a great example of what just opening the floodgates and allowing people to become agents without having the slightest idea about rules, regulations, ethics or laws is creating in the marketplace.

WHY does this agent not know the facts about what he/she has been doing? (And what about the receiving parties?)

I am just sick of hearing of these slick tactics - no wonder it is so difficult for people who play by the rules to get ahead.


Dont worry about it. he/she will get reported to the real estate commision sooner or later and license revoked.

Dont know how long you've been an agent, but it is now MANDATORY(in florida at least) to pass 60 hours of class time, based on real estate principals, and law before you're even allowed to take the state exam. Still, how somebody could be a licensed agent and NOT know a law like that is beyond me.

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#140114 - 05/11/07 04:37 AM Re: Referral, what is legal or illegal??? [Re: TPA_sold]
JamesCruz Offline
Member

Registered: 01/11/07
Posts: 18
Loc: Seattle, Wa
Wasn't this on the Realtor test from Promissor? Looks like he got that question wrong. Well at least now you know not to do it. And maybe you should consider a new brokerage, if they did that, who knows what they will do next.
_________________________
James Christopher Cruz
Future Keller-Williams Real Estate Agent
Helping People in the Northwest choose their most important asset in their life....their Home.

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#140125 - 05/11/07 05:35 AM Re: Referral, what is legal or illegal??? [Re: JamesCruz]
staggart Offline
Veteran Member

Registered: 09/18/04
Posts: 930
Loc: Idaho Falls, ID, USA
To prevent future "misunderstandings" let me state the rules:

It is improper for a licensed real estate agent to pay anyone for business. The sole exception is that a real estate agent may pay a referral fee to another licensed agent for business referred to that agent (most so-called internet lead providers, relocation companies and reo entities have a licensed brokerage to allow reciept of referral fees). But, nothing can be paid to individuals or companies who are not licensed for sending business to you.

Further, agents may not pay nor receive payment from third party service providers such as lenders, title companies, appraisers, home inspectors, etc. for business referred to them or from them.

These rules apply nationally through the federal RESPA (Real Estate Settlement Procedures Act) and most states have equivalent language. Further, most state brokerage statutes (I believe all) prohibit the sharing of any real estate commission with an unlicensed person.

These prohibitions carry stiff penalties. They are felonies and are associated with jail time and large fines.

_________________________
Steve Taggart
Broker
CENTURY 21 Advantage
Southeast Idaho's Real Estate Leader(sm)
The GOLD Standard(sm)
400 W. Sunnyside Road
Idaho Falls, ID 83402
(208) 524-2121
http://www.IFhomes.com
http://www.IFreschool.com
staggart@ida.net

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#140149 - 05/11/07 11:51 AM Re: Referral, what is legal or illegal??? [Re: staggart]
Indy Broker Offline
Member

Registered: 11/11/04
Posts: 128
Loc: Central Indiana
_________________________
Bettina Settles
Managing Broker
www.BettinaSettlesRealty.com
www.ireiba.com

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#140157 - 05/11/07 12:04 PM Re: Referral, what is legal or illegal??? [Re: Indy Broker]
FL Realtor Offline
Member

Registered: 11/13/04
Posts: 217
Loc: Florida
What's an angent? Is that similar to an agent, except angelic?

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#140170 - 05/11/07 02:15 PM Re: Referral, what is legal or illegal??? [Re: FL Realtor]
Realtyeyes Offline
Member

Registered: 03/25/07
Posts: 129
Loc: California
Everyone seems to be so selfrighteous and letter-of-the-law in their responses. My experience after 16 years as an agent and broker tells me that corruption and unethical behavior are the dominant orders of the day.


Realtyeyes

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#140174 - 05/11/07 02:30 PM Re: Referral, what is legal or illegal??? [Re: Realtyeyes]
staggart Offline
Veteran Member

Registered: 09/18/04
Posts: 930
Loc: Idaho Falls, ID, USA
Bettina Settles --- It will depend on your state brokerage statutue.

In mine, one cannot give anything of value -- thus, the giftcard would be inappropriate.

The basic concept is simple: You cannot buy business from an unlicensed person or entity.

_________________________
Steve Taggart
Broker
CENTURY 21 Advantage
Southeast Idaho's Real Estate Leader(sm)
The GOLD Standard(sm)
400 W. Sunnyside Road
Idaho Falls, ID 83402
(208) 524-2121
http://www.IFhomes.com
http://www.IFreschool.com
staggart@ida.net

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#140175 - 05/11/07 02:30 PM Re: Referral, what is legal or illegal??? [Re: Realtyeyes]
staggart Offline
Veteran Member

Registered: 09/18/04
Posts: 930
Loc: Idaho Falls, ID, USA
Realtyeyes ---

I strongly disagree with your overall evaluation of the industry.

Of course, there are bad eggs. But, you --- personally --- have an affirmative duty to weed those out.
_________________________
Steve Taggart
Broker
CENTURY 21 Advantage
Southeast Idaho's Real Estate Leader(sm)
The GOLD Standard(sm)
400 W. Sunnyside Road
Idaho Falls, ID 83402
(208) 524-2121
http://www.IFhomes.com
http://www.IFreschool.com
staggart@ida.net

Top
#140178 - 05/11/07 03:10 PM Re: Referral, what is legal or illegal??? [Re: staggart]
Paul Oaks Offline
Major Contributor

Registered: 06/23/04
Posts: 3370
Loc: Central Illinois
Steve,
The only thing you forgot to mention is that what you stated applies only to residential transactions. Commercial transactions are not subject to RESPA. In a commercial transaction the LO can freely offer a referral fee for sending business his way.

Originally Posted By: staggart
To prevent future "misunderstandings" let me state the rules:

It is improper for a licensed real estate agent to pay anyone for business. The sole exception is that a real estate agent may pay a referral fee to another licensed agent for business referred to that agent (most so-called internet lead providers, relocation companies and reo entities have a licensed brokerage to allow reciept of referral fees). But, nothing can be paid to individuals or companies who are not licensed for sending business to you.

Further, agents may not pay nor receive payment from third party service providers such as lenders, title companies, appraisers, home inspectors, etc. for business referred to them or from them.

These rules apply nationally through the federal RESPA (Real Estate Settlement Procedures Act) and most states have equivalent language. Further, most state brokerage statutes (I believe all) prohibit the sharing of any real estate commission with an unlicensed person.

These prohibitions carry stiff penalties. They are felonies and are associated with jail time and large fines.

_________________________
Paul Oaks
Oaks Real Estate Group

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#140179 - 05/11/07 03:17 PM Re: Referral, what is legal or illegal??? [Re: Paul Oaks]
smg Offline
Major Contributor

Registered: 02/16/06
Posts: 2823
Loc: United States
In Arizona, this was covered in depth in class and on the licensing test. I am really surprised that someone would even ask this.

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