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The Interchange: The Interchange: Helping to resolve “after-the-fact” Helping to resolve “after-the-fact”

referral fee complaintsreferral fee complaints

Coalition Corner:Business training tools for HR staff, real estate licensees and other service professionals in the relocation and real estate industries

© 2005, Employee Relocation Council/Worldwide ERC® Coalition

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Program objectives

• This program supplements a monthly editorial feature in Worldwide ERC®’s Mobility magazine

• This segment will:

– Review key facts about real estate referral fees

– Highlight methods for resolving and reducing “after-the-fact” referral fee requests, particularly through the Interchange online complaint resolution tool

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Introduction

• Referral fee programs are commonly used within relocation and affinity program industries

• They can generate additional business and income for real estate practitioners, brokerage firms, relocation management companies and corporations or affinity program sponsors

• A variety of efforts have been implemented to address and reduce the incidence of unacceptable “after-the-fact” referral fee requests, or improper requests for the payment of a real estate referral fee following the conclusion of a transaction

Such efforts include…

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Efforts to Eliminate or Reduce “After-the-Fact” Referral Fee Requests

• A “Policy Statement on the Collection of Real Estate Referral Fees” at http://www.erc.org/coalition/library/referral_policy.shtml and industry pledge of adherence

• “STOP sign” referral fee communications for transferees

(http://www.erc.org/pdf/stop-read-react.pdf) and licensees (http://www.erc.org/pdf/BrokerStop.pdf)

• The Interchange at http://www.erc.org/coalition/interchange.shtml-- a free, confidential and online resource available to Coalition/Worldwide ERC® members and non-members alike

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Key Referral Fee Facts

– Referral fees can only be paid to other entities holding real estate broker’s licenses

– Referral fees can be generated on either the departure (selling), or the destination (buying) side of moves

– The majority of complaints arise when licensees are unaware of

the requirement to pay a referral fee at the beginning of a relationship

– Good rule of thumb to determine the validity of a referral fee: “first contract, not first contact” methodology

• In other words, while a licensee and a transferee/affinity group member may have had some form of contact prior to the request for a fee, whether or not the fee is justified will depend on when the contractual agreement dictating the referral fee policy was established

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About The Interchange

– Was created to facilitate the confidential communication of after-the-fact referral fee concerns, while at the same time, allowing the Worldwide ERC® Coalition to learn more about general areas where improved communication, education, and/or standards in the industry may be needed

– Object is to ensure swift and equitable problem resolution

– Brings the issue of an after-the-fact referral fee request to the attention of the appropriate senior executive(s) from employers, relocation service firms and affinity groups

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How The Interchange Works

– Complainants are encouraged to use the Interchange e-form at (http://www.erc.org/coalition/interchange/complaint_form.shtml) to send a brief, factual message about a referral fee issue

– Complainants receive an e-mail confirmation of receipt of message

– The issue is swiftly brought to the attention of the appropriate contact(s)

– A reply should arrive within 10 business days or sooner (or complainants are notified of any need for additional reply time)

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In Summary

– The Interchange is a communications tool, not a mediation service

– Relocation companies commit to investigate the complaint and to expeditiously communicate their findings back to the complainant

– Coupled with additional educational and communications efforts to raise awareness, the Interchange is a major influence in reducing the instances of improper after-the-fact referral fee requests