As confusing as the RESPA regarding the referrals seems on the surface, it is meant to aid the commerce and prevent fraud. And it accomplishes this goal very well.
By being compensated for referring a client, agents have incentive to refer their clients and customers to other agent outside of their geographical area - or for any reason in the same geographical area, ex, the contacted agent is overbooked and cannot represent additional client without compromising due diligence - thus, the general public, buyers and sellers are served better.
Now, loan officer paying a referral fee every time an agent sent them a client, or the settlement company paying a referral fee - or even a *gift* - every time an agent sent them a closing client would surely lead to fraud and compromised service in the long run........
Even agents giving *gifts* to anyone for referring buyers and sellers to them would also lead to fraud, because it would lead to unfair competition and temptation to manipulate the system. Right now the way RESPA works, agents are breaking the law if they give a *gift* to their own GRANDMOTHER for referring clients to them. We all hope, that our Grandmas would NOT do anything incriminating, but we also all know that Grandmoms are known to go out of their way for their grandkids .......
I am assuming that you are selling your current home in California and purchasing another home in West Virginia. It is perfectly LEGAL for your listing agent in California to give you a $500 rebate as long as the $500 is listed on HUD-1 and your lender financing your home in West Virginia approved the rebate - unless you are buying with cash. All money and funds exchanged in the real estate transaction must be disclosed on HUD-1 statement, so make sure the $500 is listed on HUD-1 if you do not want the RESPA police knocking on your door.
P.S. You are in California and purchasing in West Virginia, but you posted your question in Ashburn, VA. Is there any piece left out in your question that would help us to give you a more complete answer?