Is Better Real Estate a scam?
In the United States, RESPA Section 8 and CFPB Regulation X maintain firm prohibitions against kickbacks and unearned fees, with particular statutory exemptions, with regards to settlement services involving most federally related mortgage loans. This includes services provided by all real estate brokers, real estate agents, and Realtors to homebuyers and home sellers.
'No person shall give, and no person shall accept any fee, kickback, or thing of value pursuant to any agreement or understanding, oral or otherwise, that business incident to or a part of a real estate settlement service involving a federally related mortgage loan shall be referred to any person.' 12 U.S.C. 2607(a). 'Any person or persons who violate the provisions of this section shall be fined not more than $10,000 or imprisoned for not more than one year, or both.' 12 U.S.C. 2607(d)(1).
There is a narrow exemption to this law, for any: 'payments pursuant to cooperative brokerage and referral arrangements or agreements between real estate agents and brokers.' 12 U.S.C. 2607(c)(3). Service provided by a 'real estate broker' is codified under RESPA as a 'settlement service' that is 'provided in connection with a prospective or actual settlement.' 24 C.F.R 3500.2. A mere possession of a 'shell' real estate license does not meet this designation. Better Real Estate is not genuine brokerage acting in a brokerage capacity, but it attempts to meet this exemption as a 'shell' real estate entity.
When Better Real Estate acts as an 'agent-matching service' or a 'referral platform' it may, of course, easily sell customer leads and advertising to real estate brokers. However, under RESPA such sales must never be tied to the outcome of the successful transaction or based on a percentage of brokerages' commissions. The US-CFPB Advisory Opinion issued on February 7, 2023, further confirms that any operator of a 'settlement services' digital comparison-shopping platform receives a prohibited referral fee in violation of RESPA Section 8 when the operator receives a 'thing of value' for referral activity.
Because Better Real Estate does not provide 'service provided in connection with a prospective or actual settlement' when making a referral, the referral is not a bona fide 'settlement service,' and it does not act as a bona fide 'real estate broker,' and it does not meet an exemption for 'payments pursuant to cooperative brokerage and referral arrangements or agreements between real estate agents and brokers.' The scheme cardinally, collects RESPA-prohibited 'fee, kickback, or thing of value' codified under 12 U.S.C. 2607(a), subject to $10,000 fine and a year in federal prison - for each violation. There is no such thing as a 'partner agent' under law, anywhere in the United Satates, and 'shell' brokerages making referrals covered by RESPA do not meet 12 U.S.C. 2607(c)(3) exemption. Both, consumers and honest real estate professionals, should avoid Better Real Estate because it is an illegal scam, that integrally degrades value of real estate services and inflates real estate commissions with exigent kickbacks.
FAQ for Better Real Estate
What are the alternatives to Better.com Real Estate?
Better Real Estate directly competes with several broker-to-broker blanket referral fee schemes, including Redfin Partner Program, Opendoor Brokerage, Tomo, Rocket Homes, Realtor.com Opcity, loanDepot mellohome, Blend.com Realty, HomeLight.com, Mr. Cooper Xome, LemonBrew, UpNest, and others.
Genuine alternatives to Better Real Estate are sellers' agents who offer listing savings and buyers' agents who offer legitimate refunds to consumers in a legitimate fashion.
What are the pros and cons of Better.com Real Estate?
Pros: there are none with Better Real Estate. Better Real Estate's proposition to save on fees is a false advertisement. In the United States, price-fixing between licensed brokers is prohibited by the federal antitrust laws, either when buying or selling a home. Better Real Estate unlawfully ties brokerage and mortgage offers into a single proposition.
Cons: there are several main disadvantages to Better Real Estate. First, consumers are hiring two brokers for the work of one when working with Better Partner Agents. Second, Better Real Estate takes a hidden referral fee. Third, Better Partner Agents willingly participate with Better to price fix their listing rates and rebates.
Summary: Better Real Estate steers consumers toward their network of brokers and away from others. Better Real Estate cannot legally organize brokers into a network because blanket referral agreements, price fixing, consumer allocation, and market allocation between licensed real estate brokers in the United States are prohibited.
What is Better.com Real Estate?
Better.com Real Estate is a real estate brokerage and a broker-to-broker collusion scheme designed to collect fees by matching consumers with local real estate agents willing to pay kickbacks. When consumers submit information to Better Real Estate, either directly or when applying for a mortgage, this information is sold for undisclosed fees with real estate agents in a process known as a blind match. Better Real Estate pricing for buyer and seller representation is impossible to determine because broker services are unlawfully bundled with mortgage services.
Is Better.com Real Estate legitimate
No. Better Real Estate is a consumer allocation and a price-fixing scheme between licensed real estate brokers that increases broker commissions and limits consumer choices. In some instances Better Real Estate acts as an affiliate of Better Mortgage and may represent consumers directly, however, Better Mortgage and Better Real Estate services are unlawfully tied. Blanket referral fees set by such networks range between 30%-40% of the entire partner agents’ commissions. Better Real Estate is a pay-to-play scheme that offers biased matches for financial gain. The main qualification for partner agents who collude with Better Real Estate brokerage is their willingness to pay kickbacks.
Using its website, Better Real Estate engages in a process known as price-fixing because it fixes buyer rebates for independent Realtors, disguised as savings. Price fixing between actively licensed brokers is a felony prohibited by federal antitrust legislation everywhere in the United States.