First a warning, then a widespread investigation, and now a fine.
You get the feeling that Mike Kreidler knows who is providing some of the wonderful food, flowers and giveaways at Realtor open houses, and he would like it stopped.
Kreidler, the
Last year, investigators found widespread and illegal spending among 10
Kreidler’s office fined Ticor for the purchase of holiday gifts, dinners and floral arrangements for real estate agents and lenders in three instances, which exceeded $25 per person and constituted violations of regulations pertaining to rebates and illegal inducements. The agency fined the company $25,000 with $20,000 suspended on the condition of no further violations and the company’s adherence to a compliance plan.
According to the insurance commissioner’s office, Ticor was fined for the following:
The findings were small potatoes compared to some of the referral-abuse announcements over the past several years. For example, three years ago, California-based Southland Title Corp. and its subsidiaries, Southland Title of Orange County and Southland Title of San Diego, were alleged to have spent at least $174,000 on food, beverages and entertainment plus $62,000 on gifts and gift certificates and $218,000 more on “business support services.”
The amazing discovery was that the same company had been fined $1.5 million two years earlier for similar practices. That’s a lot of free lunches — and it gives you an idea of what one company felt it had to do to stay in the client referral game.
Real estate is a tough, competitive and highly lucrative business. Brokers say third-party providers are constantly showering them with goodies while the providers contend that they will quickly be dropped if they don’t provide the gifts.
Great stories are common. A few years ago a title insurance company offered to furnish a real estate broker’s office if all of the agents in that office wrote in the title insurance company’s name in the appropriate spot in the earnest-money agreement. Another company offered a broker the use of billboards in public places for carrying the company’s name atop preprinted earnest-money agreements. A third company offered all-expenses-paid fishing trips.
How do you separate kickbacks from company advertising? For example, let’s say the impressive luncheon buffet, paid for by a title company, is brought to a Sunday open house by a real estate agent. Is that tray a gift to the agent for past and future business or an advertisement to induce potential buyers to use the title company when buying their next home?
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