Agent2Agent in 23602>Question Details

John Souerbry, Real Estate Pro in Palo Alto, CA

Question for past or current Redfin agents... or anyone who knows something about Redfin

Asked by John Souerbry, Palo Alto, CA Fri May 27, 2011

The Redfin web site offers agents leads in return for sharing resulting commissions with Redfin (they are a broker) and with the client. It's illegal in California to split commissions or pay referral fees from commissions with anyone who is not licensed. How does the Redfin system work so that it complies with the law?

Help the community by answering this question:

Answers

4
According to the DOJ, rebates are allowed in California. You have to remember that rebates are allowed for clients only, not for just anyone. So if you have a client, you are allowed to offer them a rebate which is reflected on the HUD-1. I'm in Oregon which doesn't allowing rebating, but I think most buyers use it for closing costs and such.

Here is a link to the DOJ site which shows which states allowing rebating. http://www.justice.gov/atr/public/real_estate/rebates-details.html

As for the leads thing, the way the Redfin partnership program works, per my understanding, is that the interview partner agents in areas where they don't have a presence, but that agent is required (in allowed states) to offer a rebate. That's my understanding by the partner agents I know.
0 votes Thank Flag Link Fri May 27, 2011
Its a refund on the commission or I guess you can call it a discount. There are only 10 states that do not allow rebates be given from a commission. I am sure each transaction has to be dealt with differently when it comes to the rebate and legalities of how it is given. If there is a loan involved the lender would have to approve it and it would be listed on the HUD. Redfin does have that as a disclaimer on their site, so I imagine this is how they handle it. Cash transaction - an agent in WA could give a rebate of the commission. I would handle it on the settlement statement.
0 votes Thank Flag Link Fri May 27, 2011
Jim, thanks for the feedback. Since Redfin is licensed as a broker, it's illegal for them to rebate $$$ to clients here in California. We can give discounts and gifts, but cash is specifically illegal. I know many brokers who say they are giving cash, but in their small print they say the cash is a discount on their commission. I was just wondering if Redfin actually sends a check to clients after closing, which my real estate lawyer tells me I can't do.
0 votes Thank Flag Link Fri May 27, 2011
I think your 'shared' commissions go to Redfin and then they 'share' them with clients as a rebate. I don't think it's worth sharing your commissions with anyone!
0 votes Thank Flag Link Fri May 27, 2011
Search Advice
Ask our community a question
Email me when…

Learn more

Copyright © 2015 Trulia, Inc. All rights reserved.   |  
Have a question? Visit our Help Center to find the answer