Call it something fancy, such as a “Concierge Service,” or for what it is, a vendor referral service, but if you plan on offering this service to your real estate clients, learn how to avoid legal and other problems.
First, however, head on over to part one in this series. You’ll find it here.
RESPA refresher course
The Real Estate Settlement Procedures Act, or RESPA for short, contains several land mines for agents that you’ll want to avoid at all costs.
One goal of the Act was to crack down on kickbacks and other “abusive practices” which were common in the industry.
While the heaviest regulations fall on those in the mortgage and title industries, real estate agents can run afoul of the rules.
It’s a wise agent who will make the following a steadfast practice.
I will not request, require or accept “a payment for the referral of business” from anyone for making a referral.
The word “payment is used synonymously with the giving or receiving of a ‘thing of value,’” according to the experts at the Consumer Financial Protection Bureau (CFPB).
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It’s a fine line you’re walking
Consider not publishing the list until you have at least two companies in each section. For instance, two landscapers, two electricians, etc.
Then, cover your backside with an additional layer by displaying a disclaimer on the vendor list and anywhere it is published, such as on your website.
“When offering vendor recommendations to clients, include in writing that it is their responsibility to review vendors and select one that best fits their needs. Add language that indicates you’re providing a few recommendations for consideration, but you advise they review additional options to find the right fit,” cautions the pros at cresinsurance.com.
We found several disclaimers online, including “We do not require a fee to be on our preferred vendor list. Instead, we require a proven track record of customer satisfaction.”
Also, check out this disclaimer at sarealtywatch.com
Let’s call it something else
Dump the word “preferred” in the title’s list and never refer to a mortgage service provider by that word.
Ken Trepeta, president of the Real Estate Services Providers Council Inc. (RESPRO) told Inman.com that he thinks “… the term ‘preferred’ has become a minefield.”
“Do not designate a settlement service provider as the broker’s or agent’s ‘preferred’ company.”
Continued due diligence is a must
A one-time vetting of vendors isn’t enough. In fact, they should be vetted on an ongoing basis. The last thing you need is to have one go sour and provide crummy customer service to one of your clients or former clients.
These people reflect on your professionalism, so follow up with clients who use them. If in doubt about any vendor’s responsiveness and overall customer service, dump him/her.
While actual closing gifts are still a “thing” in real estate, we believe that brilliant customer service is the best gift you can offer. A vendor referral service is a gift that keeps on giving.
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