Month: August 2010

A FREE Lexus and $5000 Bonus? Enough!

Lennar promised a $5000 bonus and a free Lexus to the Realtor who refered them the most business.  The problem is that this offer was secretly sent out to buyer’s agents.  This offer is only being sent to Realtors and is a reward for the Realtor’s loyalty to them...   But wait a minute.   Realtors working with buyers owe their loyalty to their buyers, not Lennar…  Isn’t that bribery?

We believe that it is wrong and possibly illegal to offer money (or a Lexus) to the agent of the buyer without first obtaining their buyer’s consent.  In fact, in the agency law books (see Restatement of Agency 2d)  that we’ve looked at, it would seem that there is legal precedent indicating that this money really belongs to the buyer, not their agent.  In other words, every bonus and every Lexus given out by Lennar really belongs to the buyers, not their agents.

How many buyers if told that they could choose between reducing the purchase price of their house by $5000 and a Lexus would instead choose to pay this to their agent as a bonus?   We don’t think very many.  That leads us to believe that this money is not being disclosed, or not being disclosed properly as the buyers’ money. 

We’ve reported this to the Minnesota Commerce Department, but they remain silent on this issue.  We are looking for suggestions on how best to alert consumers to this very important issue.  Please help.

Here’s the ad sent out ONLY to Realtors:

Great Response to RESPRO Article

Great article by the Ohio Independent Land Title Association on the comment letter submitted by RESPRO. In CAARE’s eyes, RESPRO is an anti-consumer organization dedicated to proliferating controlled business arrangements which cause consumers to be stripped of unbiased decision making in the determination as to the quality of their transaction and it causes consumers to overpay for those stripped down services. Here’s the blog post: “On August 1, 2011, RESPRO submitted their written testimony concerning the Credit Risk Retention Rule found in Title X of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (the Dodd-Frank Act). This is the same subject known by normal human beings as the Qualified Residential Mortgage (QRM) rule. RESPRO’s target in the QRM proposal is the 3% “points and fees” threshold that federal regulators propose to adopt as part of the QRM definition in their Risk Retention regulation. RESPRO says the rule unfairly discriminates against the affiliated business model to the detriment of consumers and the mortgage marketplace…”

Here’s the rest of the article (click here).

Builder Bribes?

What is bribery and does it exist in residential real estate? You be the judge.

Guilty of Bribery:  As taken out of context from a criminal commercial bribery statute we were able to come up the following general definition as to what typically constitutes bribery:   Whoever corruptly offers, gives, or agrees to give directly or indirectly, any benefit, consideration, compensation, or reward to any agent or fiduciary of a person with the intent to influence the person’s performance of duties as an agent is guilty of commercial bribery.  The same is true for those who receive a bribe.

If a builder were to secretly offer Realtors who represent buyers an extra Five Thousand Dollars ($5,000.00), would this constitute a bribe?   Do you think secret money being offered to buyer agents is intended to influence the agents’ advice and guidance in selecting a builder?   If you were a consumer and found out that your Realtor was being offered $5,000 per transaction (for up to five transactions) from a particular builder, how would you feel?   And who does that money really belong to, the Realtor or the buyer?  Here’s a typical advertisement from a national builder sent out to Realtors and one from a local builder:

lennarbonus

khovnanianhomes