Is HomeLight 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. HomeLight is not genuine brokerage acting in a brokerage capacity, but it attempts to meet this exemption as a 'shell' real estate entity.
When HomeLight 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 HomeLight 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 HomeLight because it is an illegal scam, that integrally degrades value of real estate services and inflates real estate commissions with exigent kickbacks.
FAQ for HomeLight
What are the alternatives to HomeLight?
HomeLight directly competes with several broker-to-broker referral fee schemes, including Zillow Flex, Realtor.com Opcity, Redfin Partner Program, Opendoor Brokerage, Rocket Homes, mellohome, Sold.com, Xome, LemonBrew, Radius Agent, ReferralExchange, Nobul, NAEBA, UpNest, Clever Real Estate, and others.
What are the pros and cons of HomeLight?
Pros: there are none with HomeLight. HomeLight's proposition to match consumers with the best real estate agents is a false advertisement. HomeLight's broker-to-broker collusion scheme holds no tangible value to any consumer, either when buying or selling a home.
Cons: there are several major disadvantages to HomeLight. First, consumers are hiring two brokers for the work of one. Because HomeLight takes a 25% referral fee, the referred agent is unable to offer their full value to consumers. HomeLight only recommends three paying agents to consumers, leaving out the vast majority of honest agents who refuse to participate in the scheme.
Summary: HomeLight steers consumers toward their network of brokers and away from others. HomeLight cannot legally organize brokers into a network because blanket referral agreements, consumer allocation, and market allocation between licensed real estate brokers are prohibited in the United States.
What is HomeLight?
HomeLight is a 'paper' real estate brokerage. Agents agree to pay HomeLight a referral fee, on all closed transactions, through their employing broker. HomeLight does not offer any representation services. HomeLight is a consumer brokering scheme that works to receive a cut of agent's commissions with the use of blanket referral agreements.
Is HomeLight legitimate?
No. HomeLight is a consumer allocation scheme between licensed real estate brokers that increases broker commissions and limits consumer choices. HomeLight's revenue comes from blanket referral fees set at 25% of the entire broker's commission. HomeLight is scamming consumers when it claims to offer unbiased matches. HomeLight a pay-to-play scheme that offers biased matches for financial gain. The main qualification for real estate brokers who participate with HomeLight brokerage is their willingness to pay a referral fee. Consumer allocation between licenses real estate brokers is a felony in the United States prohibited by federal antitrust regulations.
How does HomeLight make money?
HomeLight is a pay-to-play scheme that offers biased matches for financial gain. HomeLight is a registered licensed broker with the California Department of Real Estate. As a licensed broker HomeLight does not offer any tangible services, instead, the company utilizes blanket referral agreements with independent Partner Agents in a possible violation of the Sherman Act and RESPA. All Partner Agents must agree to pay HomeLight a blanket referral fee to participate in the scheme.
Is HomeLight algorithm impartial?
No. HomeLight algorithm is self-proclaimed and easily amounts to unfounded results. HomeLight has a direct financial incentive to recommend the most expensive brokers to consumers because their referral fees are calculated from the total price of the commission a referred broker earns from the real estate transaction.
HomeLight does not have any legal authority to rate the quality of other real estate brokers because it is a broker like any other. HomeLight is a 100% biased platform.
What is HomeLight Simple Sale?
HomeLight Simple Sale is a consumer brokering scheme where HomeLight feeds home seller's information to cash home buyers in exchange for a hidden 4% kickback paid by the cash home buyer.
Simple Sale is not a legal home seller representation. HomeLight does not act in a listing brokerage capacity and does not have a representation agreement signed with the home seller. This means that whenever a home seller sells their home to via Simple Sale, HomeLight receives a kickback from the cash home buyer, under the premise that consumers 'save' on the cost of the listing commission.
In reality, with Simple Sale, home sellers are fed into a consumer brokering scheme, lose control of their consumer choice, are presented with below-market offers, lack exposure of their home on the open market, and receive zero market offers made by legitimate buyers.
It is unlikely that any legitimate seller's agent can recommend selling any home off-market with a third party taking hidden kickbacks from the proceeds. A legitimate real estate agent always works for the home seller and always acts in the seller’s best interest under ethics and local state Business and Professions codes. HomeLight merely acts in their self-interest and in the best interest of whoever pays it the largest kickbacks.