Before we hopped our Southwest flight to Sin City, I had time to read but not comment upon this bit by Catherine Reagor of the Arizona Republic. The truth is, it gets hard to care after a while. Whether the Republic‘s real estate reporting is completely tendentious, completely uninformed or completely random, it is almost always completely wrong. Ms. Reagor, in particular, never once saw a cliff that she didn’t immediately jump off of, whether it’s the wonder and beauty of ‘affordable’ housing expropriated at gunpoint or the dream of a desert paradise master-planned in every particular by Locutus of Borg. If the Republic is singing the praises of an on-line real estate start-up, it might be wise to park your wealth anywhere else.
Even so, and harkening back to the idea of lawsuits against RealtyBots, I seized upon the opportunity to play my favorite game as a real estate broker: Name that violation. I summarized the article to Cathy, emphasizing this:
Some real estate Web sites make money on advertising.
Others, such as myfuturenet, try to make money on the back end by getting buyers and seller to close deals online using their mortgage and title firms.
In possession of that little bit of information, a mere 36 words, the challenge for you is to name that violation.
Cathy got it instantly, of course, as every skilled practitioner would. The law this business model is most likely to violate is RESPA, the Real Estate Settlement Procedures Act. Every vendor used in a real estate transaction should be chosen by the buyer. If a real estate licensee refers a vendor, he must disclose any ‘referral fees’ or other kickbacks received from that vendor. Our policy, of course, is no kickbacks of any kind, ever, since there should never be a doubt in our clients’ minds about our absolute fidelity to their interests. But a business model that binds buyers to certain third-party vendors seems to have a RESPA suit, an agency suit – or both – baked in the cake.
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