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3.
When Agents Are Entitled to Receive Full
Disclosure 60
Minutes recently ran a segment discussing
a common practice in the auto industry
that occurs without car buyers even knowing
about it. Oftentimes, when a customer is
quoted an interest rate for financing a
vehicle, the interest rate has been
increased by the dealership to obtain even
more money from the customer in addition
to the purchase price. The dealership is
then paid money directly from the finance company for
obtaining the higher interest rate from
the customer. One
industry expert, when interviewed during
the segment, said that in all his years in
the industry he was unaware of any auto
dealership that was not utilizing this
approach in their own business. This
had me think about the level of full
disclosure that we as agents provide for our
clients at all times. I can't even imagine
agents pocketing profits by having lenders
charge higher interest rates than what's
necessary for their clients. In situations
like these, once the
transactions close, the lenders would then
secretly cut agents big checks to
deposit into their own bank accounts. And
the lenders would then enjoy the higher
interest rates that the agents had
obtained from their clients, too. This
definitely
wouldn't feel right in real estate, and it
wouldn't feel right in other industries
also. This
episode of 60 Minutes reminded me of
something I learned that is happening
in our industry. I was having a
conversation with a principal of a real
estate coaching company, and they told me
of an agreement they have in place
with one of the largest, most recognizable
real estate brokerage companies in
America. Even if you weren't in real
estate, I guarantee you'd recognize
the name of this company. The
agreement calls for rather hefty
percentages of the coaching fees paid by
agents to the coaching company to then be
paid to the real estate brokerage company
itself. This is done without any knowledge
of this by the agents themselves. So the agents hire their
coaches from the coaching company
directly, pay the coaching company by
check or credit card, and then the
coaching company pays their agreed upon
percentage of these fees directly to the real
estate brokerage company. I
was rather stunned when I learned about
this. To me it's simply unconscionable to
work in an industry where full disclosure
is essential, work for a company that
insists on this from their agents, and
then the company itself makes an agreement
calling for secret referral fees to be
paid out of money that the company's
agents pay for services. It's one
situation when this is being done with the
agents' advance knowledge of it, and quite
another when the agents have no knowledge
of this being done whatsoever. If
companies rely on their agents to provide
full disclosure of all important facts to
their clients at all times, I think it's
reasonable to say that these same
companies should treat their agents
in this manner also.
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