by John O'Leary
Good Realtors grow their business through referrals from past clients. That is why we spend so much time and effort helping our clients buy or sell property. It isn't just because we like them (which we usually do a lot) but it is also because we hope that they will be so thrilled with our service that they will recommend us to their friends, co-workers and relatives. Each person, on average, knows four or five people who are buying or selling real estate in any given year. And those people would rather hear of a great Realtor from someone they know rather than searching the Yellow Pages or the Internet.
But since this post is under the topic of "Ethics" and the title is "Referrals and Gifts" you might have guessed that there is a problem if a Realtor gives a gift to someone who refers another client to them. This also is a problem if the referral is coming from someone in the real estate industry such as mortgage companies, appraisers, title companies, home inspection companies, etc. The referrals are perfectly legal and needed, they just can't be rewarded in a monetary way or with other types of gifts.
Here is a quote from a recent article at Realtor.org, the National Association of Realtor's website dealing with this subject:
Payments aren’t just money. When you make or receive a payment or anything else of value in exchange for referral of a settlement service, you’re violating RESPA. For example, HUD recently settled with an appraiser who gave a mortgage company’s employees restaurant gift certificates in exchange for referrals. The appraiser settled with HUD by agreeing to pay $4,000, stop providing the gifts, and cooperate with HUD’s ongoing investigation of the mortgage company whose employees accepted the gifts.
We feel the best possible way to reward anyone who refers a client to us is to provide the best professional service we can to that new client. After all, that is the reason we are being referred in the first place and that new client will hopefully go back to the referrer and thank them for having told them about us!
We pride ourselves in our ethics and my partner, Mike Bodeen, has 29 years in the real estate industry with a spotless reputation. As for me? Well, I give Hawaii vacations, Mediterranean cruises, new cars and suitcases full of cash. That's why you should bring me your referrals and not give them to my partner. They are taking me away now so I'm going to continue this post from my new office in Joe Arpaio's jail cell so look for it later...
