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Use our affiliate or else.................

What do you means, you don't want to use our affiliate?

I just read an article about the brouhaha over at Long & Foster over whether or not agents should be using the affiliate owned companies for mortgages, insurance, closing, etc. Wes Foster claimed there was no pressure by anyone, ever! I'm not so sure that Wes' managers ever got that message! One of the reasons I went out on my own was the informal expectation that, while we know you are an independent contractor, we would like you to support out profit structure and use our affiliates. I was amazed at how many different ways they would make the suggestion. And while they were not supposed to retaliate against the non-users, guess who was a top producer in the office and who was passed over for the plum referrals and two-windowed office????

Anyway, what's your take on broker pressure, informal or otherwise to use company affiliates. As a business model, it makes sense for the owner. For the lazy, brown-nosing agent who wants to be the team player or worse yet - the next sales manager, it leads to unending management gratitude. For independent professionals, it's better to leave. Period.

Dave Rosenmarkle

Broker Owner

Highland Realty

davidrose@mris.com

www.HighlandAgents.com

Posted by Dave Rosenmarkle on 11/13/2007 07:42 PM

Comments (7)

broker pressure, affiliate companies, business practices, independent contractor, respa

7 Comments on Use our affiliate or else.................

NOV

2007

I am so glad I work at a company where there are no repercussions for using your choice of lender, escrow, title, etc. We have our affiliates, but while other companies are discouraged from doing sales calls in our office, we are free to use whoever we want. Not like another company on our street, who will fire you if they ever hear you speak critically of their affiliates.

Violates RESPA. I have been the preferred in-house lender for three couple different Real Estate companies and it was made known that the owne /manager would not presure their people to refer to us. Which was fine with me. I wanted to earn their business, not have their business forced upon me. At one company where the owner "pushed" his agents to use us we had the lowest referal rate from his agents. I believe that was because they were being "pushed'.

Sean Allen
The Mortgage Professionals

It is definitely a RESPA violation to force somebody to use an affiliated provider, but I guess that is how the business world works some times. Especially when times are tight, the bottom line becomes a huge deal.

I don't believe that the "Independent Contractor" status of licensees has anything to do with whether or not they refer clients to the broker affiliates. That's another matter altogether. In my opinion, I may revisit this question in a day or so.

I believe that the agents refer to affiliates because of broker/office/peer pressure. I worked in an office where a company lender had a desk and was always on the scene. He got a lot of office business. When he offered to produce a phony VOD for one of my buyers, I got away from him like a scared rabbit. I reported to management but nothing happened. Even when they knew that he was dangerous, they looked the other way.

As a broker, I interviewed and recommended local lenders for my agents and our buyers regularly. I still do. But, they are experienced folks with a good record of service to my buyers. The only gain for me is getting to the settlement table on time.

This is one of the dirtiest little secrets in real estate industry.

When I was listing and selling, I felt uneasy "pushing" my clients to use the company's in-house lender or their affiliated title company. After all, isn't the consumer supposed to freely choose whom they want to work with? If we push them onto certain lenders, title people, etc., is that free choice? Me thinks not!

As the broker for our company, we do not force our agents to use certain lenders, home inspectors, title agencies or any other "affiliated" business. The only requirement we have, is where the buyer's earnest money deposits are held. The agent's and their customers are free to choose. Of course the consumer will ask for suggestions as to whom they could use. That is fine and we will gladly give them a choice. We don't have anyone in-house, I feel it's better that way.

Though I can see the additional income that it could bring, I know that not all agents would end up using these "providers". Due to that, what kind of income is actually realized? While it may work for some companies, we have stayed away. There are also liability issues. Everyone should remember one thing...DISCLOSURE! If a company is receiving compensation from an affiliated business, it is to be disclosed that they have an affiliated business relationship with (insert name of company). I worked for an office where we had to do this...for both listings and sales contracts.

I agree with the end of your last sentence...it's to leave.

NOV

2007

Lisa - thanks for your comment. Hope things continue in the same manner.

Sean & Rob ~ I'm sure there is more truth in your concerns than not.

Lenn - For me, the huge question mark is how this has mostly stayed under the radar by the various regulatory agencies and legislative bodies who are aware of it, but just ignore it. If this issue had had half the attention that ownership of MLS listings and the Internet has had, this post would be moot.

Chris - I think the verb that describes what we do with our clients on this matter is fully operative. You are 100% correct we position ourselves to have problems whe we "push" our clients. For those Realtors in companies with affiliates, it's probably safe to fully "explain" the alternative choices and let them pick. Even with "explaining", I had this lump in my gut that just never went away.

NOV

2007

They are walking a real fine line when it comes to RESPA. They probably don't cross that line, or nobody has a vested interest enough to call them out of applying pressure to agents.

Who would spend the time and money to sue them?

To many fraudulent lending scams out there to focus on!

Frank

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