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Is NAR / REALTOR.com violating state laws?

I notice the other day (and had it confirmed by a realtor.com salesperson) that NAR and REALTOR.com are happily selling advertising to any agent in any state. For instance, an agent in Nevada can buy the ads for downtown Chicago without having a license in the State of Illinois.

The reasoning the salesperson told me is that these agents would be farming for clients that they can refer to an agent in the Windy City and get referral fees. So, that begs the questions, is this legal? Just skating by maybe?

The bottom line is that there is enough to do for the state licensing examiners and they probably won’t get caught. But what it does is leave the agents in those market out of the direct loop to the consumer and having 25% of their commission stolen and hiding from the consumer that they are dealing with an out of state, unlicensed person that they never wanted to work with in the future.

And you wonder why Congress may put a cap limit on real estate agent commissions.

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Written By

Realty Reality! That describes Fred, a sharp witted and outspoken realist for the mortgage and real estate world who has appeared on CNBC and NPR's Marketplace along with being quoted in the New York Times, The Wall Street Journal and other media outlets. Fred is the CEO of U S Spaces, Inc/Arrivva (a real estate brokerage firm in PA, NJ, DE and CA) and U S Loans Mortgage Inc (mortgage brokerage in PA, CA, FL and VA), and serves on the Board of Directors and is the Federal Legislative Director for the UpFront Mortgage Brokers. Fred is also the co-creator of real estate startup Rentscoper.com, a mathematically driven rental search engine. See everything Fred at fredglick.com.

40 Comments

40 Comments

  1. Joe Sheehan

    June 8, 2010 at 6:23 pm

    That’s interesting… A realtor.com consumer browsing properties in Chicago emails a realtor in Nevada who earns a referral fee by forwarding the clients email to a realtor they don’t even know in the consumers home town. Incredible!

    What will they think of next?

  2. Joe Loomer

    June 9, 2010 at 7:09 am

    I sense your point here has more to do with Realtor.com and NAR than anything else. After all, you can hit the top four keywords for real estate in my area and any one of them will have a homes.com, yahoorealesate.com, and realtor.com link in the top ten on the big G – essentially the same thing. My morning junk folder is full of out-of-state nugs trying to sell me leads from people already here and looking.

    Sorry Fred, but what do you think RPR is going to do? Do you not believe NAR will eventually sell an “upsize” RPR link to agents/firms that includes National IDX data? What would be the purpose of that? Oh, yeah, to sell leads to firms in other states.

    Navy Chief, Navy Pride

  3. Joe Spake

    June 9, 2010 at 8:36 am

    Fred, reminiscent of a conversation we had a couple of months ago. NAR and realtor.com can do this because no one challenges them, and the state real estate commissions are too understaffed and overworked to take on the big boys.
    I totally agree with Joe about the future impact of RPR – it’s the antithesis of NAR’s “all real estate is local” line. Our listings are already so hyper-syndicated, that it is hard for the consumer to know who the listing agent is, or where to go for the root source of information. I get calls every day from strangers about listings that they think are mine.

  4. Benn Rosales

    June 9, 2010 at 9:44 am

    Fred, you’re saying hypothetically an agent in nevada can buy keywords for chicago condo with the intention of getting calls on chicago condos? I just want to make sure I’m clear on what you’re describing.

  5. Mark Brian

    June 9, 2010 at 11:33 am

    Is R.com still run by Move or someone else? So wouldn’t they be responsible for this, even though it reflects upon NAR & the members?

    How does this truly put the consumer first? How can I truly know that referring a buyer/seller to an agent I do not know is in the best interests of the consumer?

    Does it come as a surprise that any way to get more money out of R.com is going to be exploited? Irregardless of whether it is good for the consumer or the members of NAR, I think we have seen a pattern on R.com in this regard.

  6. Fred Glick

    June 9, 2010 at 12:46 pm

    @Benn- Exactly…and they are doing it realtor.com. I suggest you go to that site and a specific zip code, say 19103.

    Call an agent with an outside the area phone. See if every agent is licensed in that state.

    You’d be surprised.

  7. Erica Ramus

    June 9, 2010 at 4:53 pm

    I think many sites are deceptive. Try Zillow … any agent can “buy” their way into the “Local Specialist” spot. That does not mean that agent IS INDEED truly a local specialist, just that they paid to be there.

  8. Paula Henry

    June 9, 2010 at 7:46 pm

    When will the madness stop? An agent can buy spots in specific cities and just sit back and collect referral fees. How does that serve the client? Are they allowed to answer questions about real estate in the city they know nothing about – or just say hey, I’ll refer you to a member of my team who specializes in that area.

    Here’s a challenge – why don’t Realtors just STOP buying all these ad spots and put these people out of business.

  9. Dunes

    June 9, 2010 at 7:58 pm

    Just to add to what Erica mentioned about Zillow..

    At Trulia if using Find a Pro the Featured (Paid Pro subscription) #1 RE PRO is

    Tampa Bay Real Estate Specialists, Tampa Bay Florida…in the Search results

    #1 Featured Agent…Tampa Bay Real Estate Specialists, Tampa Bay Florida

    Will Agents soon be fielding Questions like…
    “I want to list my Treehouse in Oregon for Sale with the Best possible Agent….Does anyone know who the Best Agents in Florida are?”

    • Erica Ramus

      June 9, 2010 at 8:01 pm

      Dunes–You and I both know agents out there are using Trulia and the other sites to troll for referrals. How many times do you see the answer, “I don’t know how Oregon works, but I know a great agent there. Call me if you want help finding a good agent out there.”

      That drives me nuts.

  10. Dunes

    June 9, 2010 at 8:32 pm

    Erika

    What drives me nuts is this…How in any possible way is any of this GOOD for the RE Industry or the actual Professional Agents trying to conduct Business in this Market?

    How?…

    If stopping things or making it known practices like this are not acceptable is not one of the Main Priorities of the True Professionals or the RE Industry as a whole..
    What is? Is this to be acceptable Social Media Marketing?

    Will Social Media Experts soon be giving Seminars on how to use Sites to set up a referral network to survive in a Tough Market?
    We non-pros sometimes wonder about things like that when listening or reading comments & discussions about credibility ect.

    • Erica Ramus

      June 9, 2010 at 8:53 pm

      Dunes– I agree. While I like making/receiving referrals, I hate the blatant “call me so I can refer you an agent” posts where it seems the agent is just looking to take a piece of the pie any way he can.

      To me a referral is earned when the agent KNOWS the buyer/seller somehow, and KNOWS the agent he is referring is a good agent (either through industry directories and his/her resume, or personal contact). Just googling “realtor seattle” and picking one has no value to me.

      When I do a referral out I call the other agent first, quiz him/her if I don’t know them, on which neighborhoods they cover, their experience, and then request to be kept in the loop so that I can keep in touch with the buyer/seller should they have questions of me. I need to know the client is with a good agent, and will be taken care of with utmost care.

      I receive many referrals in, thanks to my high google rankings and my website. I appreciate them and am thankful for the business.

      I don’t respect agents using SM just to build a referral business the way you described above.

  11. Fred Glick

    June 9, 2010 at 9:02 pm

    OK, how about a class action suit for fraud against all of the companies that allow illegal ad placement.

    As long as we notify them, they have notice.

    If they fail to act, then we may all have a basis.

  12. Erica Ramus

    June 9, 2010 at 9:08 pm

    As long as there is a “media” source, they will sell paid advertising (and yes Realtor.com is included in that category). They won’t qualify or ask for proof that someone is a top agent, or local expert. If the credit card goes thru… that’s all the proof they’ll need. Capitalism at its best.

    The consumer needs to be worldy and realize these are paid ads, not proof of EXCELLENT agent status or EXPERT status.

  13. Joe Spake

    June 9, 2010 at 10:31 pm

    Fred, the whole system is fraudulent. If the consumer goes to the internet to look for an agent or information they never really know what they are getting. RPR will muddy things even more. And Erica is totally correct, as long at the credit card goes trough you can be the top real estate agent in your area, another geographic area or the whole world – if the price is right. But will NAR address this issue? Don’t hold your breath.
    If anyone could initiate a class action suit, it would be you, Fred. Go for it!

  14. Paula Henry

    June 9, 2010 at 11:30 pm

    Dunes – That’s true here in Indy as well. Two of the top “pros” on Trulia https://www.trulia.com/IN/Indianapolis/ are in Florida and advertise for Indianapolis, Chicago, New York, Louisville and other “cold” states where I imagine they beleive they will get business from.

  15. Fred Glick

    June 10, 2010 at 8:17 am

    I had a friend of mine that is an agent in the Bay Area.

    He referred someone to another agent in New Mexico and the deal went south.

    My friend, who just made a phone call, ended up getting sued and is still in litigation.

    Point is, hopefully, these illegally placed ads by agents and the like o Trulia, Zillow, R.com, etc will be added to lawsuits.

    The flip side is, I am having my assistant call anyone on websites that is not in our area and getting their referrals!

    On a serious note, if any of you have a relationship with anyone on your state boards, you may want to point this crap out.

    In most states, you must post that you are a licensed so and so with your number.

    If one person and website gets nabbed, they will all stop.

    Also, Dunes- you seem to be “famous” on Trulia. You may want to point it out to them and see how they respond.

  16. Fred Glick

    June 10, 2010 at 8:44 am

    FYI- that is Max Pigman on the left in the picture. He is a VP of realtor.com and his email is maxpigman at me.com and his FB fanpage is: facebook.com/maxpigman#!/maxpigman?v=info

  17. Dunes

    June 10, 2010 at 11:42 am

    Fred…”Famous”????lol

    I may make a few “Most Disliked” lists ; )….I’ve been Pointing that stuff out for a long time

    Look it’s obvious to anyone who looks that it is NOT the Majority of Agents doing this, it is a Minority of PROs/Agents and they do it because the Majority allows them to…If the Majority stopped using Trulia/Zillow ect. until they stop letting the Minority damage the Majorities Rep/Business then Trulia/Zillow ect. would stop allowing it…Trulia & Zillow need Agents not the other way around..People will go where the Agents/Listings are

    Trulia & Zillow have PR’d Agents into thinking they need them and their Toys but that is totally untrue IMO..10 days without the majority of Agents/Listings or without selling Toys & subscriptions would IMO have them both screaming to you..”What do you want changed?”

    Instead though it appears they (Agents) will wait to see if You or I can fix it for them so they can continue with their Sophisticated Social Media Marketing Plans & they don’t want to irritate the SITES THEY “NEED” like ZILLOW & TRULIA lol

    Don’t need a Class-Action suit to fix this just need the Majority of Agents to say…You fix or NO MONEY FROM US….PERIOD…10 days or 1 month of no Agents for Zillow or Trulia, do ya think they’d change that practice? Same for Realtor.com!

  18. Dunes

    June 10, 2010 at 11:50 am

    I forgot to mention Site Traffic…Those sites make the big bucks off the Site Ranking/supposed site Traffic #’s..Quit giving that to them until they no longer cause more Damage than good..they’ll stop..Just my Opinion

  19. Fred Glick

    June 10, 2010 at 12:33 pm

    C’mom, Dunes, the agents are not canceling any time soon, no matter what.

    That’s why the governmental agencies have to alert these companies and agents to the issue and the punishments for doing it.

    Also, I just thought that if any agent sees an out of state agent advertising in their market, put in an ethics complaint with their local board.

    If may people do it, it will be dealt with.

  20. Dunes

    June 10, 2010 at 1:01 pm

    Fred I have no illusions Agents will put this issue ahead of the “Marketing Opportunity…

    Nor do I personally feel any obligation to put all that much effort into correcting things they are not willing to correct because it may interfere with their “Marketing opportunity”

    My vents and rants or feeble attempts at discussion are based on Consumers knowing all their options and sharing my opinion about what Agents have placed in the Internet Window for us Non-Pros to gaze at….When Agents or the Industry discuss Credibility or We have your interests as our Priority to Consumers they should look at that Window first before having any “Great Expectations” anyone is going to really take them Seriously IMHO…..

    I have little doubt personally that if any changes or improvement happen in any area concerning the RE Industry or Agents it WILL be caused by outside Forces like the Government because I have in a Year and a half at Trulia seen not one single sign the Industry or Agents will do more than discuss how others are ruining everything…somebody oughta do something!!

    “Infamous complainer/whiner and Anti-Agent at Trulia” is what ya meant I think…not famous ; ) If ya look in the Using Trulia category at Trulia you’ll see I’ve been beating the Topic of Credibility (Find a PRO ect.) to death ( or a Dead Horse as some Agents may prefer) for quite awhile

  21. Dunes

    June 10, 2010 at 1:13 pm

    PS..I do enjoy & appreciate your interviews on CNBC ect….For me a non-pro it is very refreshing and encouraging to see Honest opinion/data, expressed/shared…Kudos to you for that from one unimportant Non-Pro who feels that your honesty has most likely helped Thousands if not Millions of people..

    So mentioning Famous…I’m flattered to be sharing my opinion with such a Proven Friend to the Consumer….Thanks for placing something encouraging (Honesty) for us non-pros to look at in the Window and consider

    • Erica Ramus

      June 13, 2010 at 12:41 pm

      I have never thought of you as Anti-Realtor. And we SHOULD ALL be friends to the consumer, right?
      That’s when the government steps in… when it thinks the consumer is being screwed so they step in to give us more rules/regs. Which usually don’t work.

      All realtors should be PRO CONSUMER. Then we wouldn’t be having 90% of the conversations we have here. And we wouldn’t need to force agents to take ethics training because it would just be a given … just do the right thing, people. An industry is in trouble when you are mandated ETHICS every 4 years, and still we have issues.

  22. Dunes

    June 13, 2010 at 4:50 pm

    First To All..

    Please accept my apologies if I’m yadda yaddaing a bit to much but this particular Topic Area..(Things which may mis-lead Consumers intentionally or not intentionally is one I always find myself yadda yaddaing about 😉

    Erika…Thank-you for you for sharing your views with me and Consumers.
    I looked at your site and it is obvious you are an excellent example of a well educated, experienced and serious businessperson. An excellent example IMHO to Consumers of the True Professionalism that DOES exist in your Industry.

    I provide these 2 links (1 to a discussion over a year ago and one 6 months ago where I was arguing with Trulia about the very practice being discussed here (still am, just check the current topics under “Using Trulia”).. trulia.com/voices/Using_Trulia/Has_Top_Voices_moved_again_-97393
    trulia.com/voices/Home_Selling/Is_Trulia_Going_To_Put_Realtor_Com_Out_Of_Business-185094-p_2-recent

    I provide these only to show I’m saying nothing different now than then and this is not really a New Topic or concern I have…
    Erika….I think you said it all here
    “All realtors should be PRO CONSUMER. Then we wouldn’t be having 90% of the conversations we have here”

    I could not agree more, sometimes just doing the Right thing and remembering your own reaction those times (and we’ve all had them) you felt a business or Profession was using questionable methods to get your business..

    Sometimes Common Sense is worth more than all the Social Media Guru/PR Dept. inspired “Marketing Plans/Prospecting” Plans….

    This topic always reminds me of…
    Sir Walter Scott’s
    ”Oh what a tangled web we weave when first we practice to deceive”

    Thanks again to all here who contributed to a Topic I believe is one that many Consumers are interested in and to Fred for writing about it..

  23. Fred Glick

    June 28, 2010 at 7:57 am

    UPDATE:

    I had a woman from realtor.com call me to tell me that they will not sell unlicensed spots any more.

    Also, their salespeople will be told what the rules are and it will not happen again.

    Thanks, NAR!

  24. Joe Spake

    June 28, 2010 at 8:13 am

    BRAVO! Fred. Maybe Trulia, Zillow and the others will take notice, too.

    Do you think r.com’s new policy will effect those who already have unlicensed spots, or will they be grandfathered as long as their credit cards are valid?

  25. Fred Glick

    June 28, 2010 at 9:36 am

    They claim they will, but if you find someone, call them.

  26. me

    July 29, 2010 at 5:51 am

    I wish there was a way to stop realtor.com from giving away the pending and sold details with the VOW they will launch soon. No matter how you look at it, once the masses are able to get that data their need for an expert will be reduced and we will see half of the realtors in the US left without enough business to continue. I think people need to look back at why realtor.com was given the mls data in the first place and consider if continuing to give them the data makes sense. I think they are becoming a monopoly and realtors will suffer because they, and their brokerages, will have no room to differentiate.

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