Why Full Disclosure is so Important
Part of being a real estate agent is making sure we offer Full Disclosure to those we represent. When in an agency relationship, it is law to tell a buyer or seller everything you know. This includes any information you know about a property, any zoning changes you are aware of, and any kickbacks an agent or company might receive from other businesses.
Case in point, it appears that Coldwell Banker Burnet, a local real estate agency in Minnesota, is being taken to court over a possible RESPA (Real Estate Settlement Procedures Act) violation. The Star Tribune reports that CB Burnet “provides incentives to its agents to refer their clients to affiliated Burnet Title for high-priced title and closing services without full disclosure”. Apparently, the company discloses the fact of affiliation between Title, Loan, and Real Estate, but fail to disclose properly, in their fiduciary relationship, that their agents receive compensation for successfully referring a client to one of their affiliates.
It will be interesting to see the outcome of this lawsuit, as there are numerous real estate agencies that have title and loan partners in their offices. It becomes a problem when the agent receives something of monetary value, say a gift certificate, cash, etc for sending the lead, but fails to disclose to the client this fact. The motto every real estate agent should live by is Disclose, Disclose, Disclose. The last thing one needs is a lawsuit.
If you are in a current transaction, or will be soon, make sure you ask the agent that represents you if they are receiving any kind of a kickback for a referral. They must tell you. Now don’t think it is anything big, usually it takes the form of $25-50, so the agent won’t be making millions on the deal.