You and I were always told in our real estate classes that "steering" is not only taboo it is surely guaranteed to land you and I in court. I have been very careful over the years to give at least 3 names of all service related companies my clients will need services from. After a conversation I had this weekend with another Realtor I am taking my advice a step further.
Many "Full Service" real estate companies have popped up over the past several years. These companies have brought in Ancillary companies such as title companies, mortgage lenders, insurance companies, warranty companies and other related services. Some owners have gone as far as purchasing companies such as insurance companies (which are very popular) and adding that service to their real estate company. They advertise their real estate company as a "Full Service" company their clients can come to and "Shop at one stop". They can buy their home there, insure it there, and close it there.
I always felt this was walking on thin ice. I know for a fact there are full service real estate companies in my area that have brought in mortgage lenders into their office building and the Brokers have encouraged their agents to use these mortgage lenders. I know for a fact many of these Realtors are not giving multiple names to their clients. Is this a good idea or inviting trouble?
Well I had a nice conversation with an out of state Realtor that was kind enough to refer me a buyer I am working with. During that conversation this Realtor tells me there is trouble brewing in her county. She explains to me that there is real estate company in her market area that has a mortgage company and title company which are both owned by acting Broker of a certain real estate company.
Turns out one of the Realtors of this full service company sold a home to a buyer and closed a purchase of a home using the services of the in-house mortgage lender and title company. The buyers have now discovered some things they are not happy with in their mortgage and are upset enough they have hired legal counsel regarding what they consider as major disclosure issues and misrepresentation issues.
Of course no one knows if this will go anywhere but it does open up an interesting discussion as to whether or not real estate companies with these ancillary services is a wise move or simply opening up the company and it's Realtors to more potential litigation.
Even if I am a Realtor licensed with this full service company and I do give out 3-4 names of "other service companies" will I be safe? Or would a court of law see me as more liable for having this service within my company?
If nothing else we all need to think twice about who we refer our clients/customers to and make sure we give multiple names of service related companies. Having clients initial or sign and date a list of services and an indemnification agreement would not hurt. It many not stand up in a court of law but it may deter an unhappy client from pursuing legal action.
Food for thought
Native Idahoan and Boise Idaho Real Estate specialist serving Boise, Meridian Eagle, Nampa, Caldwell and the surrounding Treasure valley area of southwest Idaho. Specializing in residential, investment, land and commercial real estate. Search thousands of MLS listings at Boise Homes for sale and learn all about Idaho by visiting Search Idaho Homes