1. C O A L I T I O N Corner Policy Statement on the Collection of Real Estate Referral Fees Coalition Corner: Business training tools for HR staff, real estate licensees and other service professionals in the relocation and real estate industries © 2005, Employee Relocation Council/Worldwide ERC ® Coalition

2. C O A L I T I O N Corner Program Objectives This program supplements a monthly editorial feature in ERC’s Mobility magazine This segment will enable users to: –Define real estate referral fees –Describe the content of the Worldwide ERC Coalition’s “Policy Statement on the Collection of Real Estate Referral Fees” –Define some industry accepted criteria for successfully disclosing managed move referral fee program details –Be aware of the importance of proper education and communication efforts in connection with referral fee programs (and know where to find helpful resources)

3. C O A L I T I O N Corner Referral Fees Defined A real estate referral fee is a portion of a broker’s commission paid to a party that provided either a listing or selling prospect to that broker

4. C O A L I T I O N Corner Referral Fees Referral fee programs are commonly used to generate additional business and income for: –Real Estate Practitioners/Brokerage Firms –Relocation Management Companies (RMCs) –Corporations/Affinity Program Sponsors Referral fees can be generated on either the departure (selling) side, or destination (buying) side of a move Important Note: Referral fees can only be paid to another entity holding a real estate broker’s license

5. C O A L I T I O N Corner Policy Statement The Coalition’s Policy Statement on the Collection of Referral Fees ( http://www.erc.org/coalition/library/referral_policy.shtml ) contains six core elements: –An Overview –“Disclosure” Trigger Mechanisms –An Education and Communication Strategy –Policy Support –The Interchange (the Coalition’s referral fee complaint resolution tool) –A Summary

6. C O A L I T I O N Corner Overview Most “after-the-fact” referral fee complaints arise when real estate licensee is unaware of referral fee requirement at beginning of relationship with transferring employee/affinity member The Policy outlines two basic strategies to follow when placing a referral: –Proper/timely disclosure of referral fee program details –Supporting education/communication for those impacted

7. C O A L I T I O N Corner Disclosure Managing party (or party collecting fee) accepts full responsibility for disclosing referral fee requirement to obligated party, either via a relocation management company (RMC) representative or the employee/affinity program member using the broker’s services Referral fee requirement is disclosed prior to the execution of a valid listing, buyer/broker employment or agency agreement or purchase agreement Only exception to above is under terms of a “blanket agreement” (in which broker/licensees accept responsibility for paying fees on all transactions specified and agreed to in advance)…however… Blanket agreements do not negate need for proper disclosure, same criteria as outlined above should still be followed

8. C O A L I T I O N Corner Education/Communication The Policy recommends the following: –Managing party takes full responsibility for notifying/educating relocation managers, department managers/supervisors, transferees/affinity program members, etc. of all disclosure requirements that must be met in order for full program benefits to be applicable –Brokers take responsibility for educating agents/licensees about referral fee arrangements that must be honored, regardless of prior relationships, as long as proper criteria are met –Brokers notify licensees of all applicable terms of blanket agreements (and obtain written acknowledgement)

9. C O A L I T I O N Corner Communication Resources The Coalition has developed tools to assist with the communication of referral fee program details to transferees/affinity program members: –http://www.erc.org/pdf/stop-read-react.pdfhttp://www.erc.org/pdf/stop-read-react.pdf And to licensees: –http://www.erc.org/pdf/BrokerStop.pdf

10. C O A L I T I O N Corner The Interchange http://www.erc.org/coalition/interchange.shtml Online, confidential complaint resolution tool Available to anyone (free of charge) Brings matter to attention of appropriate decision maker(s)