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Guess it's just loan officers/mortgage brokers who can't pay RE agent's for referral. Seems like the concept is the same to me though. My buddy is a lawyer and I thought he had told me that he could not receive a referral fee either. Guess it is just RE agents.
Still don't see why the OP's sister should get a cut for basically doing nothing.
Guess it's just loan officers/mortgage brokers who can't pay RE agent's for referral. Seems like the concept is the same to me though. My buddy is a lawyer and I thought he had told me that he could not receive a referral fee either. Guess it is just RE agents....
The Real Estate Settlement Procedures Act (RESPA) is a consumer protection statute, first passed in 1974. The purposes of RESPA are
to help consumers become better shoppers for settlement services and
to eliminate kickbacks and referral fees that unnecessarily increase the costs of certain settlement services.
...Section 8 of RESPA prohibits a person from giving or accepting anything of value for referrals of settlement service business related to a federally related mortgage loan....
RESPA only applies to settlement services. A lawyer can not take a referral fee for providing settlement services. Agent referrals have nothing to do with settlement services.
I could see the listing agent increasing their fees to cover the kickback to the referring agent.
They can't do that without the seller knowing and agreeing ahead of time and it would be a bad business move to even try it. Anyone so greedy doesn't deserve to get listings. How would that conversation go over with a client? Trying to convince them I have to make $12,000 instead of $9,000? Rather than pay the referral fee themselves they will find another agent.
It has already been said on here over and over. Agents love getting referrals. They do have the option of turning it away if they don't want to pay a referral fee, but why do that? They are very common here because I am near a state line. Most of us don't have a license in both states. I welcome them and will gladly pay the 25% for a client I didn't have to find on my own. The amount of commission paid remains the same and the split is between the two agents. Costs the seller nothing more.
They can't do that without the seller knowing and agreeing ahead of time and it would be a bad business move to even try it. Anyone so greedy doesn't deserve to get listings. How would that conversation go over with a client? Trying to convince them I have to make $12,000 instead of $9,000? Rather than pay the referral fee themselves they will find another agent.
It has already been said on here over and over. Agents love getting referrals. They do have the option of turning it away if they don't want to pay a referral fee, but why do that? They are very common here because I am near a state line. Most of us don't have a license in both states. I welcome them and will gladly pay the 25% for a client I didn't have to find on my own. The amount of commission paid remains the same and the split is between the two agents. Costs the seller nothing more.
How would the seller know what the fees are going to be ahead of time?
Seller contacts agent A. Agent A says the seller would be better served by agent B. Agent B gets together with the seller. Maybe agent B would have offered 5.5% to get the listing, but now shoots for 6% because they know they have to pay a referral fee.
The referring agent deserves 25% for making a phone call??
This is why it is illegal for loan officers to pay agents for referrals. The loan officers would push to make more $$ per file because they have to compensate the agent who didn't do any work other than say "here's a card...call this guy". Sure the borrowers could shop harder and find a better deal, but that is not how the consumer protection laws work.
How would the seller know what the fees are going to be ahead of time?
Seller contacts agent A. Agent A says the seller would be better served by agent B. Agent B gets together with the seller. Maybe agent B would have offered 5.5% to get the listing, but now shoots for 6% because they know they have to pay a referral fee.
The referring agent deserves 25% for making a phone call??
The referring agent deserves 25% for interviewing and confirming an agent who will take good care of her sister, offering her the referral opportunity, and helping the process. It is only "a phone call" for really sloppy referring agents, who are shopping for 30% or 40% rather than trying to help a family member.
The referring agent deserves 25% if the other agent agrees to engage with the referred client. Almost all agents DO agree. If no agreement, probably no referral, but at least the parties made the decisions professionally with their eyes open.
And, don't believe for a second that the sisters would not discuss the commission. Any attempt to tack on 1% to make it up would not go unnoticed, I am sure.
How would the seller know what the fees are going to be ahead of time?
Seller contacts agent A. Agent A says the seller would be better served by agent B. Agent B gets together with the seller. Maybe agent B would have offered 5.5% to get the listing, but now shoots for 6% because they know they have to pay a referral fee.
The referring agent deserves 25% for making a phone call??
The seller has to sign a seller agreement ahead of time. If the seller insists on 5.5 and Agent B won't do it he can find someone else if he wants to. What the seller is willing to agree on is up to them. Agent B also might do 5.5 when the seller insists. Maybe Maybe Maybe. Maybe the sky will fall.
In my opinion yes, I would gladly pay 25% for someone to hand me business I didn't have to find and I expect it if I refer a client to someone. It is worth it to me to pay them for this and I want them to call me again the next time.
This is why it is illegal for loan officers to pay agents for referrals. The loan officers would push to make more $$ per file because they have to compensate the agent who didn't do any work other than say "here's a card...call this guy". Sure the borrowers could shop harder and find a better deal, but that is not how the consumer protection laws work.
When I refer someone to a loan officer, they remain my client and it is enough that I get paid that way. There is no good reason for kickbacks. All of us are in this business to make money, not to do a service for the public out of the kindness of our heart. Why waste my time making phone calls that do nothing for my business? And if I don't pay those that would give me a referral why should they call me?
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