Last week we discussed how a Real Estate Agent can legally receive compensation from a lender for performing actual services that benefit the lender and does not cost the buyer in any way.
Getting compensated just for referring a lender is another matter altogether. In this scenario, it’s probable that the buyer is paying for the kickback indirectly. If it’s from the lender, the buyer is likely to receive a higher rate or higher lender fees in order to compensate.
My experience has taught me that if a lender is paying a kickback to a Real Estate Agent, it never ends well. If you have to pay to get business, then you’re probably not very good at your job and the agent will eventually drop you for a lack of performance.
If you are good at your job, then you will eventually acquire a good pipeline of business and the files that you have to pay kickbacks for will be put on the backburner compared to files on which you keep your full commission. You won’t do it intentionally, it’s just human nature. Your realtor will eventually get pissed off at your lack of service and drop you. Either way, the Realtor will go elsewhere. As a Loan Officer, you lose either way and your reputation will suffer.
In all the years I’ve been in the mortgage business, I have never paid a kickback, nor have I ever received one (Lenders have been known to accept fees for referring Title Companies). Instead, I demand exceptional service from any Title Company I allow to do business with us. It benefits us, our borrower and everyone involved in the transaction. It will lead to more referrals therefore more business and in the end, more income. No kickbacks needed.
Don’t ask some else to pay you for their hard work, but demand excellent service from them. Look, if you’re a Realtor and you want to make more money on a deal, just charge more. If you’re better and work harder than everyone else then you’ll be known as being expensive, but you get the job done. That’s a heck of a lot better than having a reputation for taking kickbacks.
Be in it for the long haul, not the quick buck. Work Hard, be honest and God will grace you with more than you could want.