Zillow Flex has just published their kickbacks pricing schedule for anyone to see. It will take the hammer on the head, but, eventually, Rich Barton is now committing multiple counts of wire fraud by blatantly scaling Regulation X, RESPA Section 8, and Sherman Antitrust Act violations online.
“For each purchase or sale of a property you complete with a Premier Agent Flex connection, you will pay Zillow a percentage of the full commission you expect to receive for your side of the transaction. The referral for each transaction is determined by (1) the location of the property and (2) the purchase or sale price of the property. The referral fee may vary by each Premier Agent Flex market. The referral fee for each Premier Agent Flex market is in the rate card below. If a property for a transaction is located outside of the Premier Agent Flex markets below, then the referral fee will be 35%.” Source: Zillow Flex Pricing
Zillow Flex is a broker-to-broker collusion scheme, where “partner agents” unlawfully agree to pay massive kickbacks to receive consumers’ information and engage in market allocation, consumer allocation, false advertising, unlawful kickbacks, wire fraud, and price-fixing practices in violation of, inter alia, 18 U.S.C. § 1346, 18 U.S.C. § 1343, 15 U.S.C. § 1, 15 U.S.C. § 45, 12 U.S.C. § 2607, 12 C.F.R. § 1024.14
Consumers will always significantly overpay for Realtor commissions subject to hidden kickbacks and pay-to-play steering promoted in this scheme.
12 C.F.R. § 1024.14(b) (Regulation X) states: “No referral fees. No person shall give and no person shall accept any fee, kickback or other thing of value pursuant to any agreement or understanding, oral or otherwise, that business incident to or part of a settlement service involving a federally related mortgage loan shall be referred to any person. Any referral of a settlement service is not a compensable service, except as set forth in § 1024.14(g)(1). A company may not pay any other company or the employees of any other company for the referral of settlement service business.”
Zillow Flex (and subsequently Zillow 360) is a shell entity that does not act in a brokerage capacity. A mere possession of a real estate license is not sufficient to receive kickbacks under 12 C.F.R. § 1024.14(g)(1) exemption. This exemption is only valid “when all parties are acting in a real estate brokerage capacity” and does not authorize compensation to shell entities or sham arrangements that are not a bona fide “provider of settlement services.”
To comply in good faith with 12 C.F.R. § 1024.14(g)(1) (Regulation X) exemption and 12 U.S.C. § 2607(c)(3) (RESPA Section 8) exception for cooperative brokerage and referral arrangements, genuine real estate agents and real estate brokers must render referral agreements in a particular instance for a particular transaction.
United States federal antitrust laws prohibit consumer allocation and blanket referral agreements between real estate companies. The Supreme Court has further ruled that all violations of the Sherman Act also violate the FTC Act.
In fact, Zillow Flex, licensed in several states as a real estate shell entity, willfully chooses to disengage from offering genuine real estate representation services to consumers, as the core premise to create successful collusion with other brokers through interstate wire communication to further the scheme by means of blanket referral agreements that “per se” violate 15 U.S.C. § 1. What this means is Zillow Flex uses a shell real estate license for the sole premise to collect kickbacks and form hub-and-spoke relationships by forming a network of between independent Realtors.
The lesson for Zillow (and the rest of the referral fee broker-to-broker collusion scams) is this: NEVER break more than one law at the same time. That is when you get caught.
Related to: antitrust, wire fraud, kickbacks, Zillow, U.S. Department of Justice, Federal Trade Commission, Consumer Financial Protection Bureau