Real Estate Term of the Day: Kickback

Real Estate Term of the Day: Kickback

KICKBACK – a fee or rebate to an agent or other participant in a transaction as an incentive to refer customers to a particular vendor. The referring party provides no service to the customer other than the referral. Kickbacks to brokerage agents from mortgage lenders are prohibited by the Real Estate Settlement Procedures Act (RESPA). (Barron’s Dictionary of Real Estate Terms) 

Furthermore, in Section 8 of both the Colorado Real Estate Commission approved Exclusive Right-to-Buy Listing Contract and the Exclusive Right-to-Sell Listing Contract, third party compensation from any person or entity is prohibited.

Section 8 reads:

8.    LIMITATION ON THIRD-PARTY COMPENSATION. Neither Broker nor Brokerage Firm, except as set forth in § 7, 146 will accept compensation from any other person or entity in connection with the Property without the written consent of Seller. 147 Additionally, neither Broker nor Brokerage Firm is permitted to assess or receive mark-ups or other compensation for services 148 performed by any third party or affiliated business entity unless Seller signs a separate written consent for such services.