Tuesday, April 5, 2005
RESPA Crackdown: Agent’s Advice (Not?) In Your Best Interest
News: Major Federal Realtor Crackdown is Underway
In real estate transactions, the majority of an agent’s job is just suggesting companies to the buyer and/or seller to use for certain functions (ie. what mortgage company to use, what closing attorney/escrow company to use, which appraiser, etc.) Many people are under the impression that this advice comes in your (buyer/seller) best interest.
That may be true in many cases, but you can’t count on it. For decades, agents have gotten kickbacks and “thank you” fees from the companies they recommend. The Federal Office of Housing and Urban Development (HUD) has recognized this is likely to skew the motivation for an agent’s recommendation to being based on who’s paying them more rather than what’s in your best interest (ie. is the company safe, legitimate, professional). As a result, RESPA (Real Estate Settlement Procedures Act) guidelines significantly restrict these kickbacks.
The problem: agents have been ignoring the RESPA guidelines, or skirting them underneath the table, initating a major government (HUD) crackdown - including EVERY state - with fines and penalties to agents and their benefactors. (http://realtytimes.com/rtcpages/20050404_respacrackdown.htm)
The moral of this story: when an agent recommends a company to use in the sale process, ask yourself “Why?” Do some independent investigation of the company they’re suggesting. It just may be in your best interest. But it could be in your agent’s.
~Robert Creek
Tags: real estate, realestate, home, homes
