Another Way to Stay Compliant – Avoiding Kickbacks

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Our last article on staying compliant in your marketing was a huge hit! We want to follow up with another recent compliance concern.

Here’s information on how to make sure you’re following the Real Estate Settlement and Procedures Act (RESPA) rules when it comes to kickbacks and referral fees. This was a big topic at the recent REALTORS® Legislative Meetings & Trade Expo, so let’s discuss it!

What’s the Concern?

Real estate agents unfortunately walk a thin line when it comes to cooperative agreements with service providers.

Too many folks have “wink & nod” agreements that aren’t “technically” kickbacks but are almost the same. When agents make using specific settlement providers a condition of the service, they’ve crossed a line.

Another problem is when a service provider rents an office from a brokerage and pays more than market price. The extra rent can be considered a kickback, even if the pricing is a mistake. Also, the office has to actually be used as intended – it can’t be a paper-only arrangement.

However, as long as the rent is fair market value and the office is used as intended, it’s OK to rent an office to someone you refer business to.

The goal is simple: all settlement service providers need to have a chance to serve your customers. Any arrangement that seems to give one provider access and excludes others is illegal.

What CAN You Do?

You are allowed to co-advertise with a settlement provider with an ad and a billboard as long as it’s targeted to the general public. However, you can’t target individual agents or consumers. Both you and the provider must pay your fair share for the ad as well.

A settlement provider can also pay you in order to advertise to the general public with a banner on your website. However, they cannot specifically target your clients or a brokerage’s individual agents.

You can also meet with service providers to discuss business and marketing, and one or the other can pay for the meal. Because it’s not a reimbursement for a referral, it’s legal.

What Can You NOT Do?

The primary thing you cannot do is enter into exclusive arrangements with settlement service providers. You also can’t do anything that would give a provider an unfair advantage with your customers or your brokerage’s agents.

As a result, you don’t want to list “preferred providers” on any marketing materials that go directly to consumers or brokers. Of course, you can’t receive payment for services – or any material reimbursement – from service providers.

Finally, there should be no quid pro quo arrangements, or pressure on agents to deliver customers to specific service providers.

Keep it Legal But Keep Marketing!

Don’t let these legal concerns keep you from pursuing your marketing. Use your common sense and think about whether what you’re doing gives preferential treatment to a service provider. More information can be found on the NAR FAQ for this law.

In the meantime, don’t slow your roll! Keep your marketing moving and make sure your prospects see you as the expert you are. Grab farming postcardsjust listed postcards, and much more!


This post originally shared on PrinterBees' Real Estate Marketing Magazine.


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Endre Barath, Jr.
Berkshire Hathaway HomeServices - Beverly Hills, CA
Realtor - Los Angeles Home Sales 310.486.1002

Funny you wrote this post, I was just thinking and saw that Andrea Bochelli will be at the Hollywood Bowl and tickets are going for the superb seats for $3000 it reminded me when my Title Rep used to give me tickets to the Hollywood Bowl.... the good old days:))Endre

p.s.: now I get lip balm and sunscreen:)))))))))))

Jun 13, 2018 11:05 PM #1
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Nadine Larder

Real Estate Marketing Expert/PrinterBees Founder
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