Yesterday I received an alarming Facebook message from a local Realtor.  The conversation went like this:

Agent: Hi Kara!  I hope all is well.  Does your office offer traveling settlements for Virginia and Maryland?

Me: Yes ma’am.  How awesome of you to think of me!!!

Agent: Perfect.  I am growing my business but of course there is a cost associated with doing that.  I have heard many agents mention title companies helping them grow their business by paying for leads and in return sending them business.  Is this something your title company does?

Me: We do not offer this service.  Our fees are extremely competitive and we also offer a home warranty to many of our buyers.  BTW it is a violation of RESPA for a title company to to pay for leads in exchange for business.  I would be very careful asking people for this.

Agent: Strange how a lot of agents are violating RESPA.

The RESPA laws are pretty black and white.  The portion of the law specifically relating to this conversation reads:

§2607. Prohibition against kickbacks and unearned fees

(a) Business referrals

No person shall give and no person shall accept any fee, kickback, or thing of value pursuant to any agreement or understanding, oral or otherwise, that business incident to or a part of a real estate settlement service involving a federally related mortgage loan shall be referred to any person.As the Director of Business Development for a Title Company, you would be surprised how many agents ask me for money.  But this request was different.  No agent has ever written or said out loud “in exchange for business”.

It was very clear to me that this agent had a very poor understanding of the law that is directly related to the field in which she works.  And I bet she is not the only one.

As a professional, no matter what the field, you need to know your “stuff”.  If you ever have to go before a judge, and you are asked why you broke the law, I can assure you that “I didn’t know I was breaking the law” is NOT going to be a sufficient answer.

Trust me, I understand the mindset of someone who asks for money, especially if they are seeing others do it or even being instructed by their brokerages to do it.  It is EXPENSIVE to start a real estate business.   Most get into real estate because they think it is easy money.  I also understand the opinion that companies that benefit monetarily from your referrals should contribute to the cost of attaining said referrals.  However, it is against the law.

Ask your Broker first before asking anyone for anything of any value.  The last thing you want to do is lose your license especially when you are simply trying to build your business.

Kara Macdonald is the Director of Business Development for Pruitt Title, LLC, located in Vienna, VA.  

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