If your lead source expects you to send a percentage of your buyers to a specific lender, that’s not optional. That’s pay-to-play. I walked.
I sat in a meeting recently where a national lead platform outlined their program. I had already accepted one of the highest referral fee structures I’ve seen, so I knew the cost of doing business going in. What I didn’t expect was an added pay-to-play element tied to lender usage. On paper, everything was “optional.” In reality, it didn’t come across that way. The expectation was to maintain a minimum of 10% referral to them for pre-approval letters.
After that introduction, we sat through roughly an hour on how strong their lending platform is, how seamless the process is, and how their loan officer was “local,” despite having a Texas phone number. The message was clear, whether it was said directly or not.
I called it out in the meeting. I said this looks like a RESPA violation if lead flow or participation is tied to sending business to a specific lender. That’s when they responded that their attorneys had reviewed it, and because it’s “optional,” it’s not a violation. But that’s the problem. It didn’t feel optional. It felt directly tied to whether or not I would continue receiving leads.
I asked the question again in a different way. If access to leads depends on hitting that number, how is that not steering? The response stayed the same. It’s not a requirement to fund loans through them, only to generate pre-approvals. But when your ability to stay in the program is tied to performance around that metric, it functions as a requirement whether they call it one or not.
When I left that room, I was convinced that continuing meant I’d be expected to deliver at least 10% of my buyers into their pre-approval pipeline. That’s not a gray area to me. That’s the model.
That’s also where I draw the line. Our job is to represent our clients and give them real options, not funnel them into a system tied to our lead source. The moment your business model starts influencing that decision, you’ve got a problem.
There’s also a practical issue. In my market, one lender doesn’t fit everything. Certain condos, lava zones, and unique properties require flexibility and strong local relationships. What this structure creates is obvious. The easier deals get funneled one direction, and the more complicated ones fall back on your local lenders. That’s not balanced, and it’s not sustainable.
And this isn’t just a personal concern. There are already lawsuits and industry challenges in multiple states raising this exact issue, whether tying lead access or participation to lender referrals crosses the line. That tells me this isn’t theoretical, it’s actively being challenged. (google it, you will see)
I’ve spent over 20 years building relationships with lenders who show up when deals get complicated. I’m not going to turn around and feed them only the difficult transactions just to meet a quota somewhere else.
So I walked. I’m not participating in a system where access to leads depends on sending business to a specific lender. Call it whatever you want, but to me, that’s pay-to-play.
Aloha and Mahalo.
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