In a previous post, RE-Insider called into question the legality of brokers renting out desks in the office and asked for reader examples of the “Rent-a-Desk” policy in practice. We received many examples; the following is an email exchange with one of our RE-Insider readers. Please note, company names provided by the reader have been omitted until RE-Insider can verify the information. We feel that this continues to be a very big issue in the industry and we’d appreciate your feedback.
My previous brokerage, (name omitted) 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.
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?
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?
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.
Please continue to share your information and help us in our goal to bring the real estate industry into full legal compliance.