Can My Agent Offer Me a Discount, Meal, Valuable Service, Raffle, Donation in my Name, or Gift for Referring Them Business?
- Adam Garrett
- Jan 5, 2024
- 7 min read
Updated: Jan 15, 2024

By quoting the below, I am not stating that I agree with the below (since I am not an attorney), but that the sources I'm quoting below are some of the most authoritative interpretation of the less specific but more authoritative legal code that I have seen as of the date of this publication regarding the definition of valuable consideration for referring business to real estate agents when not a real estate agent. This article is not endorsed by the Virginia Association of REALTORS® or any of the others I quote, though I quote a web page & podcast from VAR heavily.
This Article Should Not Be Construed as Legal Advice.
Keep in mind that with the below, anything in quotes is me sharing information from others, that I am not an attorney, and am not authorized to provide legal advice. Even that which is in quotes from the legal podcast has not been provided as "legal advice" but as "general legal information", to quote how they phrased it.
"...A real estate agent shall not pay or receive, directly or indirectly, any kickback, rebate, commission, thing of value, or other payment pursuant to a referral agreement..." except "between real estate licensees"
Per RESPA – The Gift That Keeps on Giving – Legal Podcast, published by the Virginia REALTORS® Association on November 22, 2022, they state the following:
(1:37 in) "In any transaction where there is a federally related mortgage loan, which is almost all federally financed residential transactions, it is illegal to give or accept a thing of value for the referral of business with some very narrow exceptions... there is not an exception when it comes to clients. That's right, you cannot give a thing of value to past clients who refer you business, and when we say, "thing of value", we mean anything of value."
One other caveat is that payments must be made directly to the broker rather than licensees who are not brokers. Even if a former client gives me a gift card, I still am required to have it pass through the hands of my broker before I can do anything with it. So what about cash deals? See the next section for more details. Here are more details on RESPA Rules from NAR.
What About Cash Deals & Loans not Covered by RESPA?
Per "New Takes on Referral Fees: Make Sure YOU Stay Compliant" published by the Virginia REALTORS® Association on March 2, 2023, they state the following:
"All referral fee arrangements must comply with federal law and state law. Under federal law, if a transaction involves a federally related mortgage loan (which includes most home purchases), you cannot give or receive any fee, kickback, or thing of value pursuant to a referral agreement or understanding whether written or oral. (Real Estate Settlement Procedures Act, 12 U.S.C. § 2607(a).) Virginia law includes a similar provision which provides a real estate agent shall not pay or receive, directly or indirectly, any kickback, rebate, commission, thing of value, or other payment pursuant to a referral agreement. (VA Code § 55.1-1009.1(A).) Both federal and state law contain carve-outs for referral agreements between real estate licensees, which allows real estate licensees to give and receive referral fees among each other..."
That code isn't limited to real estate transactions covered by RESPA.
Image courtesy Law.lis.virginia.gov
The referenced VA code includes the following statement:
A. No person selling real property, or... real estate agent... shall pay or receive, directly or indirectly, any kickback, rebate, commission, thing of value, or other payment pursuant to any agreement or understanding, oral or otherwise, that business incident to services required to complete a settlement be referred to any person.
Can my Agent Give me Extra Raffle Entries or Drinks If I Refer Them Business or Give Them a Review?
4:08 into the podcast:
"Ok, so Ryan let’s go to the legal hotline. 1st question:
Ok I know I can’t give a thing of value but I’m planning on giving all my former clients ways to earn entries into a raffle I’ll be holding for an amazing prize. One way for them to earn entries is to refer me business, but also having used my services, posting a review on Google or even just liking my social media pages. That’s OK, right? I mean, it’s not like referrals are the only way to get referrals, and there’s no value to the entry itself.
Well, not so fast. The entry actually does have value because the person could win something of value, and RESPA doesn’t care if there are other ways for people to get the same reward from you. It’s a blanket prohibition on giving a thing of value for the referral of business. So, I’m having a holiday reception and inviting all of my former clients. Everyone that comes gets 2 drink tickets, but anyone that has referred me business in the past year will get 4 drink tickets. It doesn’t matter whether they sent me 1 lead or 50, and it doesn’t even matter if that lead pans out. Is that OK?
Again, no this would violate RESPA. You’re treating people who have referred you business differently than those who didn’t for a thing of value, extra drink tickets."
What are Some Examples & Details that the VAR Podcast Author(s) State Have Monetary Value & Couldn't be Done to Reward a Non-Licensed Referer, per RESPA – The Gift That Keeps on Giving – Legal Podcast, published by the Virginia REALTORS® Association on November 22, 2022?
Is There a Max Gift Threshold?
Per RESPA – The Gift That Keeps on Giving – Legal Podcast, published by the Virginia REALTORS® Association on November 22, 2022, they state the following:
1:37-2:37
..."That's right, you cannot give a thing of value to past clients who refer you business, and when we say, "thing of value", we mean anything of value. Many people believe that there is some sort of threshold and if it's like a $5 gift card, it's OK. No. The law prohibits giving anything of value. A $5 gift card is low risk, because the CFPB, who is responsible for enforcing RESPA, has slightly bigger fish to fry, but that doesn't mean it's legal."
Can Agents Perform Valuable Services for or Take Former Clients Out to a Meal After a Referral?
Per RESPA – The Gift That Keeps on Giving – Legal Podcast, published by the Virginia REALTORS® Association on November 22, 2022, they state the following:
2:37
"You cannot give a thing of value to past clients who refer you business... if you take them out to dinner, or mow their lawn, or something like that, then there is monetary value there."
Can my Agent Give me Extra Raffle Entries If I Refer Them Business?
Per RESPA – The Gift That Keeps on Giving – Legal Podcast, published by the Virginia REALTORS® Association on November 22, 2022, they state the following:
4:08
"Ok, so Ryan let’s go to the legal hotline. 1st question:
Ok I know I can’t give a thing of value but I’m planning on giving all my former clients ways to earn entries into a raffle I’ll be holding for an amazing prize. One way for them to earn entries is to refer me business, but also having used my services, posting a review on Google or even just liking my social media pages. That’s OK, right? I mean, it’s not like referrals are the only way to get referrals, and there’s no value to the entry itself.
Well, not so fast. The entry actually does have value because the person could win something of value, and RESPA doesn’t care if there are other ways for people to get the same reward from you. It’s a blanket prohibition on giving a thing of value for the referral of business. So, I’m having a holiday reception and inviting all of my former clients. Everyone that comes gets 2 drink tickets, but anyone that has referred me business in the past year will get 4 drink tickets. It doesn’t matter whether they sent me 1 lead or 50, and it doesn’t even matter if that lead pans out. Is that OK?
Again, no this would violate RESPA. You’re treating people who have referred you business differently than those who didn’t for a thing of value, extra drink tickets."
What About Commission Discounts on Future Sale in Exchange for Referrals?
In CFPB's document titled "RESPA Frequently Asked Questions" they state the following:
"QUESTION 2:
What conditions does Regulation X establish for gifts and promotions to be
“normal promotional and educational activities” allowed under RESPA?
ANSWER (UPDATED 10/7/2020):
Regulation X allows “normal promotional and educational activities” directed to a referral source if the activities meet two conditions:
The activities are not conditioned on referral of business; and
The activities do not involve defraying expenses that otherwise would be incurred by the referral source.
12 CFR § 1024.14(g)(1)(vi)."
What About Gifts Not Dependent on Referrals?
Per RESPA – The Gift That Keeps on Giving – Legal Podcast, published by the Virginia REALTORS® Association on November 22, 2022, they state the following:
5:30
Last question:
"If I sent all of my clients a bottle of bubbly to toast the new year, will I end up on CFPB's naughty list if some of them have referred me business over the past year?
If you're giving all of your past clients or clients who have used you this past year, or whatever your criteria is, a gift, and it doesn't matter whether they referred you business, the fact that some of them may have referred you business doesn't matter, just so long as you're not treating those who sent you referrals differently than those who didn't."
The above reflects the RESPA FAQs as well, which state the following (with real estate agents being considered "settlement service providers" covered by RESPA):
RESPA Section 8 does not prohibit a lender or other settlement service provider from giving a consumer a gift or an incentive (e.g., a discount, refund of fees, chance to win a prize, etc.) for doing business with that entity. However, RESPA Section 8 prohibits, for example, giving an incentive to a consumer in exchange for the consumer referring other business to that lender or other settlement service provider.
What About a Donation in My Name?
A HUD.gov document appears to answer this question by clarifying that a donation to charity is indeed a "thing of value":
Related:
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