What is a Kickback?

[Bob Albert]

I'm starting to hear more and more about this.

Also what is and isn't illegal when it comes to referrals. Whether they be professional referrals or personal referrals.

Does this mean that I can't reward a friend for finding me a client? Do I have to hire him as a consultant and call it a commission?

 

[Bob Ipock]

Kickback may mean different things to different people. Sot of like "flipping".

In the appraisall field (under USPAP) you may pay moneyto or accept from others as lomng as it is disclosed.

In most cases "kickback" would likely mean an undisclosed payment to or from another person.



Management (ETHICS RULE)
The payment of undisclosed fees, commissions, or things of value in connection with the procurement of an assignment is unethical.

Comment: Disclosure of fees, commissions, or things of value connected to the procurement of an assignment must appear in the certification and in any transmittal letter in which conclusions are stated. In groups or organizations engaged in appraisal practice, intra-company payments to employees for business development are not considered to be unethical. Competency, rather than financial incentives, should be the primary basis for awarding an assignment.

It is unethical for an appraiser to accept an assignment, or to have a compensation arrangement for an assignment, that is contingent on any of the following:

the reporting of a predetermined result (e.g., opinion of value);

a direction in assignment results that favors the cause of the client;

the amount of a value opinion;

the attainment of a stipulated result; or

the occurrence of a subsequent event directly related to the appraiser’s opinions and specific to the assignment’s purpose.

 

[Karl]

You also MAY want to read things like the Wall Street Jorunal, as to agents in various fields that are gettingf tremendous fines for What could be debatable as to weather they are "Kick Backs" or NOT. However those debates wind up in a Court Room. Which many with MUCH more money than any Appraiser I know has, have elected to pay the fines rather than go for the debate.

My point?? Just say thank you & give the best service possible.

That way there is NO question of impoprieties.

 

[JSmith43]

If you are uncomfortable disclosing a transfer of funds, or goods/services, to all interested parties in a real estate transaction or appraisal assignment then it might be a kickback. (You might be a redneck if... series)

Real estate agents can typically divide commissions among licensed brokers, which in turn may part out commissions to licensed agents in their brokerage.

Many states permit a "kick back" of part of the sales commission to any party to the transaction. Disclosure rules probably vary state by state on this matter. I believe 13 states do not permit this type of commission rebate or sharing. It has been litigated and generally permitted by the courts and anti rebate laws struck down as being anti-competitive

Trouble is, if a commission rebate is undisclosed and is in favor of a borrower that just closed on, say, a 100% loan, a mini deception of the lender/investor has probably occurred, since technically, the borrower received over 100% financing. I assume the program limit was 100%.
Most of the time this is unintentional on the part of the borrower and agent, as they simply don't think it through.

Rebate sounds friendlier than kick back, doesn't it? :new_smile-l: