Paid referrals Illegal, but not leads?

Question

Under RESPA I believe agents are not allowed to pay for referrals. They are also not allowed to get paid to refer business to mortgage brokers and other professionals.

A friend of mine took Kinder-Reese's real estate course for agents. In it they say that you can get paid to sell "leads" to mortgage brokers, carpet cleaners and so on. They call is Host-Beneficiary relations, but it seems referrals are just called leads.

I see that there are many lead companies out there so perhaps there is a area for us to operate in.

Theres no problem with a agent selling "leads" to a mortgage broker?

Theres no problem in an agent buying a "lead" from a individual?

Account Closed · Answer

It's a lot more complicated than that. Each state has its own rules, each board has its own rules etc.

Typically salespersons can't get any referrals/commissions, only the broker can.

The spirit of the rules is that you have to disclose to people that you have a vested interest in them purchasing the thing.

Some attic insulation guys just gave us a presentation at the office and they give you a kickback if you sell their stuff. We couldn't just tell homebuyers "oh by the way, have you thought about getting better insulation? you could save on your electric bill.. here, call this number".

Note that I'm talking about a product here, not a mortgage.

I really don't recommend that you do anything before you've talked to your broker and understand this well.