Rent-a-Desk; The Latest Kickback Trick?

RE-Insider is investigating what may be the “latest” real estate kickback trick. It seems that at least one Real Estate service provider is renting space — a desk — from a real estate broker. The owner of the real estate company becomes a landlord and the service provider is a tenant. Is this practice a RESPA violation?

We are investigating a Home Mortgage company and a Home Warranty company, both of which appear to be renting space, comprised of a desk, in a real estate office. It seems that in one interesting situation, the compensation to the landlord is $700 per month! Wow!!

What we would like to know:

1. Did the real estate brokerage offer the space/desk to all other Home Mortgage and or Home Warranty Companies before leasing the space?

2. Do the rental charges exceed the actual square footage cost of the brokerage’s rent cost?

3. Does the Real Estate brokerage favor its “tenants” in providing access to the agents? Does the Real Estate brokerage provide the same access to agents to other Home Warranty and Home Mortgage companies?

4. Does the Real Estate brokerage favor its “tenants” in allowing them to participate in company events while preventing or discouraging other Home Warranty and Home Mortgage companies from participating?

5. Does the Real Estate brokerage encourage their agents to use the services of the “tenants,” or does the broker make clear that the agents may use the Home Mortgage company or Home Warranty company of their choice?

6. Is it legal for Real Estate agents and vendors of Home Mortgage and Home Warranty to share the same office space?

  • A fan

    We enjoy your articles. Keep up the good work.

  • Alex K

    During the time I was with one brokerage, we were looked down on if we didn’t use their Mortgage and title companies.. they have all services for the agent to use. My broker’s relative had the title company.

    • RE-Insider

      Sad to hear. Although I’m glad that you were just “looked down on” and still had a choice.

  • Beth S

    My goodness please let them work in peace. I think enough is enough. I truly feel that someone out there is just focusing on the negative. There are a lot of good honest hard working people out their that give 100% to their clients and deserve a lot of credit and recognition and respect for all their good service.

    • RE-Insider

      I agree entirely. Some real estate pros do things the right way, and they should be rewarded. Do you have anybody in mind? Send me an email at editor (at) re-insider dot com.

  • Jennifer

    Why are you folks so worried about things like this? No one ever cared about how the real estate brokers were forcing their agents to use their broker owned escrow (or a company they are associated with and in the pocket of) by making them pay if they didn’t use them or putting them in a lower percentage of commission split and that list goes on and on… one of the things that put me out of business when I owned my own escrow co. so I really don’t have much sympathy in these instances you talk about where the money is a whole lot less than what I lost when I lost the revenue from the escrow fee on a potential transaction where it didn’t matter how much I was charging or how excellent my services were.. I was screwed 99% of the time when my client was the buyers agent. Even though they would have a good acceptable offer the listing agent would put in a counter offer to get their own choice of services(oh I mean the sellers choice). Tell me there are not kick backs going on there !!!

    • RE-Insider

      That’s tough. Thanks for sharing your story.

  • JG

    Hmm, I’m not sure what the controversy is here. Perhaps this is not widely known, but almost all real estate agents “rent” desk space from a broker. This applies to some of the largest firms, so this isn’t really a shocker. This is common practice.

    • RE-Insider

      Good point, but common does not always equal legal. I wonder how many of the largest firms would want the CFPB sniffing around these common practices.

  • HH

    I was under the impression that this wasn’t a RESPA violation. When I was with a well known company in California, there was an affiliate who had a space in our office and we were “encouraged” to use that affiliate, although we weren’t forced to. At another company I worked for, the brokers actually did a joint venture with the lender so we were partners with them. Is this against RESPA law?

    • RE-Insider

      We will need a lot more details from you before we can consult with a RESPA expert on your particular situation. For starters I recommend that you go back to our article: Rent-a-Desk; The Latest Kickback Trick? and answer the 6 questions that we posted. Any additional information is always appreciated.

  • Lara

    I am very pleased that finally somebody is investigating what I consider to be the latest crime in our industry.

    Companies such as (NAMES PROTECTED until RE-INSIDER can verify this information) are guilty of paying exorbitant “rents” to very large Real Estate companies such as (NAMES PROTECTED until RE-INSIDER can verify this information) just to name a few in the Los Angeles/San Fernando Valley area of Southern California.

    This could be a huge find by your group and is definitely news worthy and hopefully your vigorous investigation will lead to the end of this type of bribery and deceit.

    I will be watching for future articles showing success in protecting consumers from this obvious scam.

    • RE-Insider

      We are very appreciative for your contributions and hope that you can give us more details. Please go over the 6 questions on Rent-a-Desk; The Latest Kickback Trick? and let us know how is done.

  • TDG

    My previous brokerage, (NAME PROTECTED until RE-INSIDER can verify this information) has an “in house lender.” They provide the office space and push the agents to use that lender and in exchange the lender splits their profit with the office.

    To answer your questions:

    1. Did the real estate brokerage offer the space/desk to all other Home Mortgage and or Home Warranty Companies before leasing the space?

    No, they interviewed several lenders and went with the one who would give them the most $.

    2. Do the rental charges exceed the actual square footage cost of the brokerage’s rent cost?

    They incorporate the “rent” in what they get back from the lender

    3. Does the Real Estate brokerage favor its “tenants” in providing access to the agents? Does the Real Estate brokerage provide the same access to agents to other Home Warranty and Home Mortgage companies?

    The “in house” lender speaks at each office meeting and is presented as “part of the team.” Other lenders are not allowed in the office to speak.

    4. Does the Real Estate brokerage favor its “tenants” in allowing them to participate in company events while preventing or discouraging other Home Warranty and Home Mortgage companies from participating?

    Yes

    5. Does the Real Estate brokerage encourage their agents to use the services of the “tenants,” or does the broker make clear that the agents may use the Home Mortgage company or Home Warranty company of their choice?

    No, the brokerage itself does “profit sharing” with the agents so they encourage the agents to use the in house lender in order to increase the office profit and thus give kickbacks to the individual agents.

    • RE-Insider

      TDG,

      Thank you for your contribution to our readers. We are in the process of requesting an interview with the broker and possibly with the brokerage agents. During the research period, we are not going to disclose any names or updates but please keep a close eye on RE-Insider site.

  • Emily

    Why do you think this is “new”? It’s been accepted practice for years with a great deal of pressure put on agents to ONLY use the inhouse people

    • RE-Insider

      Maybe it’s not new, but it’s still wrong.

  • Janet

    Wow wouldn’t it be wonderful if brokers were not allowed to own their own escrow companies….

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