RESPA Prohibitions – referral fees, kickbacks…

OK. After taking a RESPA (Real Estate Settlement Procedures Act) educational training clas, I’m pretty sure that I am going to quit real estate and get a job at PetCo…

Anyway… Here is a great tidbit of information that all of you should know about…

Did you know that it is COMPLETELY ILLEGAL to offer ANYTHING of value to ANYONE who refers you business?
Per RESPA: “RESPA prohibits a real estate broker or agent from receiving a “thing of value” for referring business to a settlement provider, or SSP, such as a mortgage banker, mortgage broker, title company or title agent.”
Furthermore, it is also illegal to give ANYTHING of value to a friend/past client/etc. who refers you business.

What does this mean? Well, it means that if a friend of yours gives you a name of a person who wants to buy/sell a house, and you give your friend a gift certificate to WalMart in thanks, you are in violation of RESPA. Even if the referred person does not do a transaction with you, and you make no money off of the referral, you CANNOT give any item of value for a referral. (This excludes Realtor-Realtor referrals and contracted lead purchase programs, as there is a written and universally enforced contract for these exceptions.)
So, no more “Refer A Friend” programs. No more “Tokens of Appreciation”.

What CAN you do? Well, besides a genuine THANK YOU, you are allowed to physically take that person out to dinner, discuss business and thank them for their “general” support of your business. That is it.


About Mariana

I am a Mom, Wife, Real Estate Agent Trainer and Mortgage Lender. Find me at
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