Posted over 14 years ago

Realtor Kickbacks-Referring Clients To Vendors

Realtor Kickbacks-Referring Clients To Vendors-As agents we all work with vendors that we know and trust will treat our clients fairly and honestly. For example, I have a Lender that is excellent with FHA loans. I know he will get the job done and handle any issues that often arise with a challenging FHA loan. And we all have our favorite home inspector that is thorough, fast and fairly priced.

I can see where there may be a question in some of our clients minds as to why we are so passionate about using our favorite vendors. Perhaps they think we may get a “cut” or “Realtor Kickback” from these vendors.

So i would like to be clear in this blog that RESPA prohibits Realtor Kickbacks or anyone from giving or accepting a fee, kickback, or anything of value in exchange for referrals of settlement service business involving a federally related mortgage loan.

In addition, RESPA prohibits fee-splitting and receiving unearned fees for services not actually performed. Examples of such prohibited fee arrangements include:

Lenders giving a referral fee to a real estate agent referring a purchaser
Title companies giving kickbacks to lenders who refer loans to them in exchange for something of value
Appraisers sharing the appraisal fee with the lender who ordered the appraisal for a borrower.

On a personal level (legal or not) I see “Realtor Kick Backs” as a huge conflict of interest on many levels. I’m very happy with my commissions and don’t need to compromise my integrity by getting a “cut” of all the action so to speak.

My whole intentions of recommending a Lender or other vendor to a client is to provide them with quality service and someone who will get the job done in an responsible and ethical fashion. In fact I provide a page on my web site to give my clients educated choices.

Realtor Kickback Here are Specific California Regulations Regarding Disclosure by Agents Receiving Compensation from a Lender or Others: In addition to the disclosures for agent compensation required under RESPA, the California Business and Professions Code Section 10177.4 prohibits certain referrals for compensation by real estate licensees. A real estate licensee may not receive compensation for referring customers to any escrow agent, structural pest control firm, home protection company, title insurer, controlled escrow company, or underwritten title company. Under Penal Code Section 641.4, any receipt of such compensation from an employee of a title insurer, underwritten title company or controlled escrow company is deemed commercial bribery for which criminal prosecution and penalties are possible.

Realtor Kickbacks-Referring Clients To Vendors

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