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Referral Fees: Illegal? True or False

By Collette Lee

Real Estate Broker/Owner with Tower Realty

December 17, 2007 05:30 AM

The other day I was asked if another agent sends out flyers promising a referral fee to any person who brings in a buyer a seller is it illegal?

Being in the business for over 20 years I KNOW this is very ILLEGAL! Making this statement TRUE.

It's stated in the RESPA (Real Estate Settlement Procedures Act) that payments of referral fees from an agent to an unlicensed person is prohibited. However, there has never been anyone busted for it.

Which made me start to wonder...Why on earth is there a law in place which obvious offenders never get punished for? Any ideas?

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Steve Glose

Keller Williams Legacy - Orlando, FL

TRC, CIPS, 407-616-7286, Orlando Real Estate, Orla

This statement is true. No kickbacks or referral fees allowed.

Dec 17, 2007 05:41 AM

Jen Hudson

Windermere Real Estate/M2, LLC - Stanwood, WA

Stanwood, Camano & Arlington, WA

Hi Collette, I have had this conversation with many people. HUD seems to be the most likely candidate for cracking down on this practice. The conclusion that I came to was that until the practice starts to hurt consumers, HUD probably won't waste their time pursuing it. Too bad though. I don't support people who have illegal practices.

Dec 17, 2007 05:44 AM

Wayne L. Brown

Franklin Advantage Inc. - Alpine, CA

We often see this in our own neighborhood. Let's face it, unless someone turns someone in for it, the DRE just doesn't have enough people to inforce it.

They should actually make it a law banning it entirely. Afterall, per RESPA a lender or any such affiliate is prohibited from offering any time of referral for business. The only question I have is, why are Realtors allowed to give referrals to other Realtors?

Fair is fair..........dont you think?

Merry Chrismas and Best Wishes for the New Year.

Dec 21, 2007 03:08 PM

Anonymous

question...

My landlord * a realtor* will not make me pay rent for the month if I refer her people who are in need of short sales and they decide to short sale with her...So far it has been my friends who I have referred to her and I dont plan on seeking anyone else but if someone needs help then I refer to her...is this illegal?? thanks!!!!

Dec 22, 2007 06:10 AM