I saw a Facebook ad. In fact, a broker pointed it out to me where they were wondering if the agent was soliciting referrals in a way that was illegal here in Utah. Hey, I’m Danny, the ethical realtor. In Utah, there is a rule that says a real estate professional cannot pay for referrals as in for someone who’s not licensed.
So, as a broker, I can’t go out and say, “Hey, I’ll give you 100 bucks if you bring me a referral that turns into a property sale,” because that enters into the realm of people getting paid to help people find real estate. And so, Utah State decided that that should be activity that only licensed individuals can do.
I can totally ask people for referrals. I can always do that. But I can’t advertise that I will pay them per referral and I can’t pay them per referral. With one small exception, which we’ll talk about in a later video. But this ad said, “If you post here somebody who is looking to buy a home, I will enter you in a drawing. And then once everyone’s entered, then one of you will win $150 gift card. Put your people who are looking to buy or sell a house here in the comments or tag them and that will enter you into my drawing.”
And so that raises the question. Is entering someone in a drawing counted as compensation or soliciting them to give you referrals for a prize or for a cash back? And so that kind of is an interesting question. And I think that would kind of be determined up to subjectivity.
I think the division of real estate would look at that and say, well, there’s no money changing hands. They’re not asking for a direct referral. And so, my guess is that the division of real estate would allow a type of contest as long as it obeys contest rules, and drawing rules and gambling rules in Utah. As long as it obeys all of those things, I think they probably would allow that on the solicitation basis, because you’re not asking for a direct referral and you’re not getting a direct monetary compensation, you’re just entering them into an opportunity. And so, my guess is they would let that slide.
But it does kind of skirt that edge, doesn’t it? Where you’re giving something in return for a referral. And in Utah that’s considered illegal. So that’s something we’ll want to look at in the future. These new property management laws have a carve out for something kind of similar to that that I raised questions on when they were starting to write those laws.
So, that’s something to consider. But if you see an advertisement like that, let me know. Let me see if there’s something else we need to look at. And let’s keep all of us agents on the straight and narrow so that our clients are well taken care of.