REALTOR®, Lender, Title Company Joint Advertisement and RESPA
Disclaimer: The picture shown here is for illustration only and is
not the actual advertisement flyer.
You can do cooperative marketing with a title company, lender, or
have them present at an open house providing food & refreshments, but the rules are strict for
compliance. As far as the marketing relationships between service
providers, there are gray areas, so be quite careful. The fines are
stiff, and some have lost their licenses due to these shared
A title company or a lender, as an example, can:
share ad space with you if you pay your pro-rata share of the
provide handouts/promotional items if they have their logo and not
direct mail, email if you pay your share of the
attend your open house and provide food, refreshments, etc only if
they promote their business with their sign/logo or be present to
answer questions about their services.
It is very
important that you realize the
Cost in above examples is not only the actual money spent by parties,
but it must include the Fair Market Value of products or services
delivered by parties too.
For example, consider the following example:
A REALTOR® is planning to advertise her business, listings, etc with
a lender in her area in a flyer. 3/4th of the page will
be taken by the REALTOR® and 1/4th by lender
one of his family members is going to design the flyer.
member has a business doing this type of work, the Lender must use
the actual fee of developing/designing of such a flyer and add that
to the total cost.
member does not have a business doing this type of work and he/she
will do this as a favor, still the Lender must use the Fair Market
Value fee of developing/designing of such a flyer in their market
and add that to the total cost, though the lender had not paid any
money from his pocket.
in this example, the Fair Market Value of designing such a flyer is
REALTOR® is going to use a company to blast emails to 1000 people in
her area. Let’s assume this cost $75 that REALTOR® pays from her
the total cost of this advertisement would be: $75 (email blast) +
$125 (FMV of flyer) = $200
pro-rata share of the cost
= 3/4 * $200 = $150
Lender pro-rata share of the
cost = 1/4 * $200 = $50
pro-rata share of the cost
= $150 -$75 (already paid) =$75 remaining to pay to the Lender.
In this example, the REALTOR® must pay additional $75 to the Lender
to meet the RESPA requirements, otherwise would be in violation of
FOLLOWING ADVERTISEMENT REQUIREMENTS:
REALTORS® and Lenders have many requirements that must follow in
their advertisements, otherwise they are in violation of laws.
For example, REALTORS®
clearly identify the
licensee, including the name of your broker (in a clear and
conspicuous manner), and avoiding deceptive or misleading
Lenders have their own set of rules and restrictions, such as if the
mention interest rate, they must disclose the APR.
question is what happens if one party’s advertisement, e.g., Lender,
does not meet the requirements, who will be at fault and will be
fined? The REALTOR® who has sent out the emails / flyers OR the
Lender who provided the incorrect advertisement?
just a few of the marketing areas that have been a problem for real
estate brokers and RESPA. It can get complicated, so you should run
any decisions about marketing or referral of business by a RESPA
experienced attorney if you have any doubt. The examples here are
only to give you a broad overview of activities and their regulation
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