Is Neighborhoods.com 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. Neighborhoods.com is not genuine brokerage acting in a brokerage capacity, but it attempts to meet this exemption as a 'shell' real estate entity.
When Neighborhoods.com 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 Neighborhoods.com 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 Neighborhoods.com because it is an illegal scam, that integrally degrades value of real estate services and inflates real estate commissions with exigent kickbacks.
FAQ for Neighborhoods.com
What are the alternatives to Neighborhoods.com?
Neighborhoods.com directly competes with several broker-to-broker collusion schemes, including Clever Real Estate, Redfin Partner Program, Opendoor Brokerage, Sold.com, Xome, Blend Realty, LemonBrew, Nobul, UpNest, Realtor ReadyConnect Opcity, Better Real Estate, mellohome, Rocket Homes, and others.
Genuine alternatives to Neighborhoods.com are sellers' agents who offer listing savings and buyers' agents who offer legitimate refunds to consumers.
What are the pros and cons of Neighborhoods.com?
Pros: there are none with Neighborhoods.com. Neighborhoods.com is a product of collusion and false advertisement. In the United States, blanket consumer allocation between licensed brokers is prohibited by the federal antitrust laws, either when buying or selling a home.
Cons: there are several main disadvantages to Neighborhoods.com. First, consumers are hiring two brokers for the work of one. Second, Neighborhoods.com takes a hidden referral fee. Third, Neighborhoods.com partner agents willingly participate in unlawful collusion.
Summary: Neighborhoods.com steers consumers toward their network of partner agents and away from others. Neighborhoods.com cannot legally organize brokers into any 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 Neighborhoods.com?
Neighborhoods.com is a referral fee network and a broker-to-broker collusion scheme that allocates home buyers and home sellers to real estate agents by means of a shell real estate brokerage in Illinois, licensed as Neighborhoods.com, LLC
Is Neighborhoods.com legitimate?
No. Neighborhoods.com is a consumer allocation scheme between licensed real estate brokers that increases broker commissions and limits consumer choices. Neighborhoods.com revenue comes from undisclosed referral fees. Blanket referral fees set by this network is hidden and is likely set between 25% and 40% of the entire broker's commission. Neighborhoods.com is a pay-to-play scheme that offers biased matches for financial gain. The main qualification for real estate brokers who collude with Neighborhoods.com shell brokerage is their willingness to pay a blanket referral fee.
Using its website as an interstate wire communication mechanism to further the scheme, Neighborhoods.com engages in wire fraud. Consumer allocation between actively licensed brokers is a felony prohibited by several federal and state antitrust regulations.