Non-Customer Referrals - How Do You Handle?

[Herkster]

So, one of our branches has a coffee shop across the road which we, and employees of the bank that we are an agency with, frequent quite often. I'm wondering, if this coffee shop buys in, if there is any issues with paying their employees a referral fee for any customer they send out way?

Now, I know this can not be dependent on a policy being sold, and we'd have to pay it regardless whether we end up binding coverage.

Let's just assume we are paying $10 a referral to the employees of the coffee shop, is there anything wrong with that? And yes, I know the easy answer is run it by the DOI, which I will. I just assume that there is PLENTY of other agents and agencies that pay referrals out to real estate brokers and mortgage brokers, which they may or may not insure. It's essentially the same thing...

 

[VolAgent]

This is state specific...

Since it is nominal, I doubt there would be an issue as long as you paid it for every referral. Also, you would likely need to 1099 anyone you paid $600 or more in a year.

From what I understand, paying referral fees to real estate agents and mortgage brokers is pointless. They make so much off the sale, a small referral fee is meaningless. You better off helping make sure it closes smoothly and on time. I have just begun marketing to mortgage brokers myself. So far no one has asked for a fee and I've offered none.

 

[Herkster]

This is state specific...

Since it is nominal, I doubt there would be an issue as long as you paid it for every referral. Also, you would likely need to 1099 anyone you paid $600 or more in a year.

From what I understand, paying referral fees to real estate agents and mortgage brokers is pointless. They make so much off the sale, a small referral fee is meaningless. You better off helping make sure it closes smoothly and on time. I have just begun marketing to mortgage brokers myself. So far no one has asked for a fee and I've offered none.

Thanks for the reply, and I agree 100% on the mortgage and real estate brokers. I suppose I should send an email to the DOI to make sure I'm correct, but that sounds like a hassle

 

[LostDollar]

I don't know what a "responsible party" is in this situation, but how about talking with responsible parties at 2-3 of the organizations you are most interestecd in working with and asking if they'd be willing to drop a refrigerator magnet in the packet of papers going home with the home buyer?

(or not sure about this one-but sharing in the cost of a printed pocket folder for the home buyer to put their papers in?)

 

[InsCommentary]

"I suppose I should send an email to the DOI to make sure I'm correct, but that sounds like a hassle"

Losing your license would be an even bigger hassle. As long as the referral fee isn't tied to a sale, most states permit it. But, for the few that might not, it's best to confirm with the regulator.