Safeguarding real estate choices

Has anti-kickback legislation gone too far?

By Inman News Feed
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Has anti-kickback legislation gone too far?

Tom Kelly
Inman News

One of the main concerns that an agent-broker panel voiced at the most recent National Association of Realtors convention was the lack of fraternalism (and "a prevailing rudeness") in today's highly competitive market.

Speakers traced the cause to a lack of education, training, communication and etiquette during the boom sales times of five years ago, when not enough time was spent mentoring new members of the nation's largest trade organization.

That same message of education and communication went out -- especially to older Realtors -- that they had better get on board with today's social media avenues (Twitter, Facebook, etc.) because the future generations of homebuyers will expect that mode of correspondence.

The transition to new social media may not reduce the number of actual agents (which is what happened to old-guard Realtors a decade ago with the advent of online listings, property information and communication), but it will whittle out some members, especially if the present stock market rally is real and sustained.

NAR has gone out of its way at its national convention to help prepare its rank-and-file members by offering more than 20 classes in basic applications including Microsoft Photo Editor, Microsoft Word, Outlook, Excel, PowerPoint, Blackberry, Microsoft Publisher and Windows 7 in an attempt to better communicate with and serve their peers and customers.

Clearly, most of the participants are not tech-savvy, nor do they come from communication centers of the world. The Technology Learning Center at the annual convention drew more than 4,200 attendees to the classes last year and 5,700 in 2007.

Given California's SB 133, which places significant restrictions on the types of training a title company can provide to the real estate industry, the Technology Learning Center was canceled. That's because Stewart Title had sponsored the popular program for the past eight years and most likely will do so again when the huge confab returns in November to convention-needy New Orleans.

Has the pendulum swung too far, especially when it comes to basic education for Realtors? The California law seeks "zero tolerance" in any incentives to real estate salespersons, forbidding title insurance representatives from even participating at a real estate company's community service day. According to California's SB 133, violations include:

(1) Promotional items with a permanently affixed company logo of the underwritten title company, title insurer, or controlled escrow company, with a value of not more than ten dollars ($10) each. "Promotional item" does not include a gift certificate, gift card, or other item that has a specific monetary value on its face, or that may be exchanged for any other item having a specific monetary value.

(2) Furnishing education or educational materials exclusively related to the business of title insurance for a person if continuing education credits are not provided."

I thought about how California got to that $10 number when a San Diego-based writer reminded me that a few years ago California-based Southland Title Corp. and its subsidiaries, Southland Title of Orange County and Southland Title of San Diego, were alleged to have spent at least $174,000 on food, beverages and entertainment plus $62,000 on gifts and gifts certificates and $218,000 more on "business support services.''

The amazing piece was that the same company was fined $1.5 million two years before for similar practices. That's a lot of free lunches -- and it gives you an idea of what Southland felt it had to do to stay in the game.

I am all for reining in the lavish lunches, blocks of ballpark tickets and free advertising that title companies provide for top-producing agents. I thought Mike Kreidler, Washington state insurance commissioner, was absolutely correct three years ago when he exposed and fined title companies for luring agents with all of the above and more.

Washington state mirrors the Real Estate Settlement and Procedures Act (RESPA), which limits the amount third-party providers can spend on individual agents to $25 a year.

The intent of the regulation is to safeguard choice for consumers and housing representatives. Consumers have a right to choose escrow and title companies and to know why lenders prefer certain appraisers and credit companies. All salespersons should choose services in the best interests of their customers and not themselves.

In fact, a larger problem is the pressure some real estate agents receive to use in-house providers -- appraisal, loan, title -- without indicating outside services are available as well. That's not serving the consumer. And, some in-house agents say it's not serving their needs, either, because they don't like the in-house choices.

Has the pendulum swung too far? Tweet me: @boomerwriter.

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