As a rookie
agent some fourteen years ago, all I wanted to do was get my license and start
“selling homes”. At that time, the Middle Tennessee Association of Realtors
would allow a new agent to postpone the orientation classes for up to one year.
Yes, that’s exactly what I did! Several closings into my new career, I
approached the one year mark, so begrudgingly scheduled my attendance in the
NAR-required education. However, once the course was complete, I came away from
the entire experience thinking “I really could have used all that information a
year ago.” Not only did I learn quite a
few nifty marketing ideas to help me attract new clientele, I was also made
aware of several liability issues to avoid.
Flash-forward
to about eight years ago, I began teaching continuing education courses as well
as the orientation at MTAR. As a real estate
trainer, I enjoy sharing concepts that will benefit my fellow Realtors, even if
it’s those embarrassing stories of mistakes I made in the field. After all, why
not learn about potential pitfalls in a classroom rather than actually making
them yourself.
It was after
one of these classes, I was approached by three or four Realtors who all had
the same concern. I often have a student or two ask for some specific advice,
and if the subject isn’t too “sticky”, I’m glad to help. In my 45-minute orientation
class on the Real Estate and Settlement Procedures Act (RESPA) I had covered
several points of how the Federal Government is opposed to, and eliminating
kickbacks in the world of real estate. The agents related to me they were
approached by a lender who provided marketing materials completely free of
charge, even though I had just mentioned RESPA’s “fair share” rule of Section 8 as it pertained to advertising
costs. From what was related to me, they were assured by the loan originator
that paying the entire ad bill was entirely compliant with the law.
The whole
story left me scratching my head, and wondering “has something recently changed
concerning Section 8?” A good teacher wants to keep abreast of developments
with one of his taught subjects. After all, it’s not like the Federal
Government is going to give me a call to ask permission or even inform. So,
like a good Realtor, I did my research. The law looked exactly the same as when
I read it almost a decade earlier. Then, I called the RESPA hotline. It rang, and rang, and rang. I called several
times, but it appeared no one was manning the hotline at HUD. In fact, they
weren’t. Not anymore.
Wanting a
quick answer to give any updates at the Professional Courtesies class I was to
teach the following day, I picked up the phone and called someone I knew would
give me a quick, honest answer without all the legalese mumbo jumbo; the
Board’s law firm of Smith & Sholar. In speaking with Brian Smith, I asked
if the “fair share” concept was still in play. He assured me Section 8 was still very much
the law of the land. One new development he did mention was that of the
Consumer Financial Protection Bureau, or CFPB. You probably first heard of this
entity a couple of years ago as a consumer protection agency that would
investigate credit card issues. In addition to that, and student loans, it also
polices RESPA violations. Smith told me
this was a very serious investigating authority. Unlike HUD of prior years, who
were essentially paper pushers, this new organization had teeth and wasn’t
afraid of using them. He related a couple of stories where several real estate
entities in the South were hit with fines in the
millions. To further put the nail in the
coffin, Brian suggested if any Realtor is approached by a vendor to pay for all
the marketing cost, and states that it is legal, have that lender (or title
company, etc.) provide an opinion letter
from their attorneys. He quickly followed that up with stating no attorney will
ever furnish such a letter.
It takes a
small army to close a real estate transaction. Realtors need good partners they
can depend on to not only close the deal but to look out for the best interest
of the client. After all, that’s why RESPA exists. Shared marketing can be a
true win-win. Not only does it cut down on a professionals overall ad bill, but
it also exposes the public to several qualified experts at the same time.
Whether you have someone you trust share in the cost, or go it alone, just be
certain you are in compliance with the law.
Blaine
Little SpeakingForEffect.com
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