Paying Commissions to non-REALTORS
Posted Dec 31, 2006 @ 1:36 pm, Viewed by 494 Visitors, Read 494 Times.In a recent newsletter, the Tennessee Association of Realtors (TAR) reported that the Tennessee Real Estate Commission (TREC) is proposing a few rule changes. TAR is collecting comments regarding changes to Rule 1260-2-.01 and Rule 1260-2-.33.
In recent years, the TAR has successfully blocked TREC rule changes via legislative support in behalf of the Association of REALTORS.
Now here is what gets my goat. The Winter 2006 issue of the TREC's official newsletter, the Tennessee Real Estate News Journal, was just published and had no mention of any of these propsed changes.
- TREC rule changes should be announced by TREC and not have to be policed by TAR.
- The person or persons submitting the changes should be made available so any possible conflict of interests could be examined.
- When they make the annoncement, a description of how they feel the changes will help protect the public or how the changes will better service the public, REALTORS or agencies.
- They should not be allowed to hide behind last minute submissions with no attached intent or names.
PROPOSED CHANGE
Rule 1260-2-.33 Gifts and Prizes is amended by deleting paragraph (2).
Following is the text of the entire rule as it is currently found in the law. The Commission proposes to remove part (2) of the rule in this section. If the rule is implemented, it would then ALLOW cash rebates and cash prizes to be paid to non-licensees.
RULES OF TENNESSEE REAL ESTATE COMMISSION
Chapter 1260-2 RULES OF CONDUCT
RULE 1260-2-.33 GIFTS AND PRIZES.
(1) A licensee may offer a gift, prize, or other valuable consideration as an inducement to the purchase, listing, or lease of real estate only if the offer is made:
(a) Under the sponsorship and with the approval of the firm with whom the licensee is affiliated; and
(b) In writing, signed by the licensee, with disclosure of all pertinent details, including but not limited to:
1. accurate specifications of the gift, prize, or other valuable consideration offered;
2. fair market value;
3. the time and place of delivery; and
4. any requirements which must be satisfied by the prospective purchaser or lessor.
(2) No cash rebates, cash gifts, or cash prizes may be paid to any person who does not hold a real estate license.
NOTE: This sentence is the section that the Commission proposes to remove, which would then allow cash rebates to consumers from commissions, etc., and open the door for unlicensed persons to earn a cash payment/commission for real estate activity and allow the purpose of licensee regulation to be circumvented.
Currently, Rule 1260-2-.33 is being used by some to offer closing costs to buyers as an incentive to purchase. Which is great to help cash poor buyers get in a home and for builders to offer incentives to (again buyers) to purchase new homes.
This has also generated a competetive bidding war of sorts in states that allow this, with agents and more importantly companies, offering cash rebates to home buyers. I must cast my unofficial vote for NO one with out a license being able to receive a commission (cash) under any circumstances.
If you want to receive real estate commissions, then become a REALTOR with all the code of ethics, regulations, training and standards that go along with it.
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Social Bookmarking6 Responses to “Paying Commissions to non-REALTORS”
Mert
and with all due respect is not http://www.memphis-realestate.net/1000-gift-card-offer.php already against what you are defending?
Believe it or not; no. A gift card that is not through normal venues, exchangeable for cash, is not considered cash. It's ironic that you can legally buy someone a thank you gift of say a Ferrari, but can not give them $5 cash. Here in the Memphis area, it has become standard to include the buyers closing costs in the price of a home. If paying cash to buyers were begun, it would very quickly become a standard with some of the market as well. "How much money are you going to give me for using you? Johnny is giving $1,000 can you beat it?" I have to pay $2000 in origination fees for my loan, if you pay me that much, I will use your services." The real estate, credit score, business sophistication level is below par for a great percentage of the home buyers in the area. How much is it going to cost me and how much are you goinig to give me are at the top of the important list.
I also must emphasize the main point that got my goat, as it were. That the Tennessee Real Estate Commission, did not post a winter news letter, which is customary and did not relay these proposals in any way. The Tennessee Association of Realtors had to make the announcement. And, there is no mention of who or whom on the Commission submitted these changes and what their reasoning is. Back door politics with NO public awareness or time for review, debate or discussion. If you want to convince me or any other Realtor it is a good thing, then bring it out in the open and lets discuss it and debate it. My views have been altered or changed many times with a good debate of an issue.
Yeah, but I think I see Mert's point - sort of, is it not a workaround to just ask the buyers - Ok I can't give you $2000 because that is against the rules, so give me a list of things you know you are going to need to buy that equals $2000 (First 2 months groceries or something) and then go ahead and spend your grocery money on your closing costs, I will give you $2000 in Gift certificates to the closest grocery store. Seems kind of a flawed rule
Actually, I agree whole hardily. However, I do exploit the loop hole from time to time. And have lowered the maximum amount I will pay from $1000 to $500 and will in turn down the road illiminate it all together.
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Ed Pierce: Full time Realtor and Default Services Manager for six affiliate offices in the Greater Memphis area. Real estate is more than a business, it is a hobby and passion for me. Read More
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While I agree, almost to the point that this will be the end of many small real estate brokerages, you simply cannot prevent free market forces.