MD Real Estate Agents Can Now be Fined $5000.00 For Making Referrals

Real Estate Agent with RE/MAX Distinctive / LIC in VA

As ridiculous as it sounds, there must have been enough complaints for this new rule/regulation to be created. Personally, I do not rush to make referrals or recommendations on lenders, inspectors, etc. I do point out that certains lenders do or don't do 203K loans for example. I also ask both buyers and sellers if they already have lender, inspectors, title company, warranty company, etc that they prefer to use. I have zero interest in affiliate deals some companies might have with my broker.

 This new regulation in Maryland would really limit the amount of recommendations I would make to buyers and sellers. Although, it wouldn't be that time consuming to document the companies I might refer someone to. It could be worth the trouble to verify someone is licensed, etc.

 I wonder now if many MD brokers will just instruct their agents to not make any referrals just to play it safe? Why take the risk? Would giving someone a list of lenders, inspectors, etc be considered indirectly making a referral? I suppose it would be hard to monitor in most cases, but if there was a problem, and a disgruntled buyer or seller filed a complaint, agents could find themselves in trouble.


Seems like agents already have to conduct business with one hand tied behind their back.



Jeff Pearl | Lic in VA

Remax Distinctive | McLean VA


Homes | Land | Farms | Historic

Equal Housing

Comments (32)

Margaret Goss
@Properties - Winnetka, IL
Chicago's North Shore & Winnetka Real Estate

Is the state worried about money changing hands for referrals?  I have no problem with referrals but if that's the problem and it's common, then changes have to be made

Nov 14, 2014 06:02 AM
Jeff Pearl
RE/MAX Distinctive / LIC in VA - Lovettsville, VA
Full Service Full Time Realtor

#8- hi John, I agree. It can't be time consuming, and how do agents know databases that provide the info are up to date? What about pending cases?

#9- Hi Carla, I think many agents will take that approach, but then they'll have to verify the info they provide.

#10- Hi Robert, I never accepted any fees either. Just gave a list that they could use or not use. Thanks.

#11- Hi Tammy, I havn't seen any stories about what brought this on, but I expect there are some out there somewhere.

#12- Hi Michele, i think every agent is taught that, but now in MD agents must document the license and referral info first.

#13- Hi Margaret, My guess is that it has to do wih agents trying to force people to use their affiliate companies so their broker gets a kickback.

Nov 14, 2014 06:27 AM
Rebecca Bulkeley
Exit Realty Professionals - Alexandria, VA

With a new Gov on the way, one can only hope for strong changes to be made within the state for common sense. Thank you for sharing.

Nov 14, 2014 07:13 AM
Ricki Eichler McCallum
CastNet Realty - Corpus Christi, TX
Broker,GRI,ABR, e-Pro, TAHS

That is a stiff penalty but not as much as a lawsuit.  Just don't refer.

Nov 14, 2014 07:31 AM
Ed (Edward) Silva, 203-206-0754
Mapleridge Realty, CT 203-206-0754 - Waterbury, CT
Central CT Real Estate Broker Serving all equally

It can be considered steering, but if at east 3 qualified practitioners are offered it would be difficult to say it was a bad move

Nov 14, 2014 08:40 AM
Joan Whitebook
BHG The Masiello Group - Nashua, NH
Consumer Focused Real Estate Services

It seems there should be some way to give consumers some name, but let them know the should ask for refereneces/ insurance etc.

Nov 14, 2014 10:59 AM
Praful Thakkar
LAER Realty Partners - Andover, MA
Andover, MA: Andover Luxury Homes For Sale

Jeff Pearl - now I wonder why can't one refer a lender/attorney/inspector when one represents the buyers and works in their best interest. What if they ask for a referral? (Should we give them a list of these service providers?)

Nov 14, 2014 11:05 AM
Patricia Kennedy
RLAH@Properties - Washington, DC
Home in the Capital

Jeff, my understanding is that, if we recommend any service provider, we are responsible for ensuring they are licensed to do whatever they do in the state of Maryland. 

And I gotta say, Maryland really is into regulatory overkill.  Maybe the new Republican governor will make it easier for us.

Nov 14, 2014 11:46 AM
Claude Labbe
RLAH / @properties - Washington, DC
Realty for Your Busy Life

Maryland, trying to legislate common sense once again.

As a consumer, if the realtor gave me one name only, I'd be suspicious. If they gave me three and told me to use whoever I want, I'd still think I better check into them myself, just 'cuz.

Apparently, I'm just less trusting than the average person.  Apparently, I'd likely not benefit much from Maryland's regulations as a consumer.  As an agent, now a few more steps.

Nov 14, 2014 01:20 PM
Gerard Gilbers
Higher Authority Markeing - Asheboro, NC
Your Marketing Master

I was told before to provide a list of three or more to ensure there were no issues with the referrals. I am against all of the regulations but have seen some people strong arm buyers into using specific lenders and other providers.

Nov 14, 2014 02:45 PM
Toronto, ON

Hi Jeff - I saw the WaPost article before I came here.  I couldn't figure out how it could take a real estate agent "three hours to locate a licensed inspector with the necessary credentials" as quoted in the article.  For fun, I went to see if one well known ActiveRainer, who has already commented on your post, is, in fact, a Maryland real estate broker.  It took less than 5 seconds to click on the Washington Post link and verify that she was.  It would take another few seconds to generate a PDF or printout of the screen and another few seconds to type up an email with the recommendations and prescribed data elements.  (BTW, this same blogger is also a broker and a firm in Virginia, using a different WaPost link.)

I also tried to find a Maryland home inspector.  I typed "S" into last name and found quite a few in milliseconds.  Of course, I don't know if they are good, responsive, work in the right area etc. but that is not the purpose of the new Maryland law.

All in all, it doesn't seem to be a cumbersome law, just a bit more administration that should not take a significant amount of time.

Nov 14, 2014 06:31 PM
Nina Hollander, Broker
Coldwell Banker Realty - Charlotte, NC
Your Greater Charlotte Realtor

This is totally insane! Fortunately, our contracts here in NC explicily state that we can provide recommendations, but that the buyers are responsible for any advice they take from any professional we may hae recommended. The point is to provide several options and let them choose. But buyers and sellers do want to depend on us to help them make the right choices.

Nov 14, 2014 08:52 PM
Jeff Pearl
RE/MAX Distinctive / LIC in VA - Lovettsville, VA
Full Service Full Time Realtor

#15- Hi Rebecca, Maybe, but doubt this will be top priority for new administration.

#16- Hi Rikki, I bet many agents just won't do referrals.

#17- Hi Ed, Maybe, but all 3 licences would have to be verified by the agent before passing on a list.

#18- Hi Joan, I suppose they want agents to keep up with who has a license and who doesn't.

#19- Hi Praful, Just make sure their license is in good standing first.

#20- Hi Patricia, Exactly! Just a little more work for agents.

#21- Hi Claude, Yes, we jsut need to be the ones to research and verify before referring.

#22- Hi Gerard, that has been standard practice. Agents will still do that after verify licenses, etc.

#23- Hi Marc, I think the problem might have to do with seniors and foreigners coming into the US who are not good with computers and don't know where to look to check on licenses, etc.

#24- Hi Nina, Yes, the final decision and choice should be that of the buyers and sellers.

Nov 14, 2014 09:44 PM
Sam Miller
RE/MAX Stars Realty - Howard, OH
Knox County Ohio Real Estate Specialist

Jeff Pearl, This is an interesting topic but it could backfire because most professionals aren't referring for kickbacks...they are referring to multiple businesses who will take care of the client or who they know will do a great job for them.  

Nov 14, 2014 11:10 PM
Hawaii homes
Century 21 iProperties Hawaii - Honolulu, HI

Sounds crazy!  If a realtor provides a list of mortgage lenders to a buyer, I don't see how that should put a realtor in jeopardy.

Nov 15, 2014 06:12 AM
Paulette Guillaume
Keller Williams Realty Centre - Columbia, MD

Usually, the clients will always ask  that question. Do you know a Lender, An inspector, or a title company.? Can you please refer me to someone that you have worked with. So, what could be the answer since we are getting penalized.? What will be our due diligence towards those clients. Do we just has to say we don't know. We can provide a list to them but that's not what they expect of us as their agent.  What can we do for Heaven sake.


Nov 15, 2014 08:38 AM
Tammy Adams ~ Realtor / Podcaster
Maricopa Real Estate Co - Maricopa, AZ
A Maricopa Agent who Works, Lives & Loves Maricopa

That is crazy. How bad does that make an agent sound when their client asks for help and we tell them figure it out themselves. Wow

Nov 15, 2014 01:16 PM
Jeff Pearl
RE/MAX Distinctive / LIC in VA - Lovettsville, VA
Full Service Full Time Realtor

#26- Hi Sam, maybe, but a certain % of agents do push their affiliates. We just need to provide the correct links for people to use now.

#27- Hi, Only if some of the lenders on your list have pending litigation, multiple complaints, etc.

#28- Hi Paulette, If they ask, we can give them a list as always, but now include the link so clienst can verify their license is in good standing, and keep a copy of list you gave them, and date it, etc.

#29- Hi Tammy, See comment in #28. I suppose agents will think before they refer now.

Nov 16, 2014 01:01 AM
Lori Cain
Own Tulsa - Tulsa, OK
Midtown Tulsa Real Estate Top Producer

I keep a Preferred Vendor list on my web site which lists 7 mortgage lenders. I have 3 insurance agents and several inspectors listed - among multiple other categories (plumbers, electricians, etc.). I encourage clients to check my list and/or ask friends or family for recommendations. I have a disclosure on my page of Preferred Vendors which I hope covers my liability: 

The above vendors are those from whom I or my clients have enjoyed good service. I hope you find this list useful.  Recommendation of these vendors is based solely on opinions and experience of the quality of their service. Please consult the BBB and ask for proof of insurance or registration if that is of concern to you.

Nov 16, 2014 01:40 AM
Jeff Pearl
RE/MAX Distinctive / LIC in VA - Lovettsville, VA
Full Service Full Time Realtor

#31- Hi Lori, I think they want to make sure vendors on list are properly licensed. Thanks.

Nov 16, 2014 08:09 PM