Transaction management platform dotloop is making it easier for real estate agents and brokers to bring existing relationships with mortgage lenders, title insurers, home warranty companies and other vendors into the platform, and use dotloop to refer their clients to their favorite service providers.
Dotloop — which opened the platform to service providers like mortgage and title professionals last year — says vendors now make up more than 30 percent of new home-page registrations.
To streamline client referrals by real estate agents and brokers, dotloop today announced a “Trusted Service Providers” initiative that allows users to control which service providers are displayed in each workspace — or “loop.”
Users who opt in to the new feature can add vendors in up to seven categories — title, mortgage, legal, home inspection, insurance, warranty, and moving and storage — that are seen by all parties in any loop.
The idea is to create new business opportunities and enable easy connections between consumers and recommended providers, dotloop said.
Dotloop cited a 62 percent increase in “deal flow” to HSA Home Warranty, the suggested home warranty provider for Better Homes and Gardens Real Estate Metro Brokers in Atlanta, Georgia, as an example.
The free version of dotloop suggests qualified vendors in select markets, which “are merely suggestions until they are added” to a loop, a dotloop spokeswoman said. Agents using the free version can also add Trusted Service Providers of their own.
Dotloop charges vendors to appear on the platform, promising to help them connect with real estate agents and their clients, who the company says “do $30 billion of transactions on dotloop every month.” Agents using the free version of dotloop can also add service providers to transactions on their own.
The Real Estate Settlement Procedures Act (RESPA) prohibits mortgage lenders and settlement services providers like title insurers from paying kickbacks to real estate brokers and agents in exchange for referring business to them.
Although there are legal avenues for real estate brokers and agents to enter into relationships with services providers — including affiliated business arrangements (AfBAs) and marketing services agreements (MSAs) — regulators are always on the lookout for RESPA violations.
Three years ago, Fidelity National Financial Inc. agreed to pay federal regulators $4.5 million to settle allegations that it paid illegal kickbacks to potentially hundreds of real estate brokerages for referring title insurance, home warranty and other business to the company through a Web-based transaction management platform, TransactionPoint.
In 2012, American Home Shield Corp. — which acquired HSA Home Warranty this year — agreed to pay up to $26 million to settle allegations that the company paid illegal kickbacks to real estate brokers and agents to market the company’s home warranties.
More recently, a Zillow employee claims in a lawsuit that the company turned a blind eye to an alleged “pay for play” arrangement between lenders and real estate agents participating in Zillow’s co-marketing program.
A Dotloop spokeswoman said its Trusted Service Providers initiative does not involve dollars changing hands between agents and service providers, “it simply enables people to work better with one another online.”
Dotloop encourages users to “consult a RESPA attorney before accepting any form of compensation from their partners,” and explicitly prohibits “using dotloop for illegal activities” including those that violate RESPA, and doing so “would be cause for exclusion from the program,” the spokeswoman said.
The company says the Trusted Service Providers platform can actually help real estate agents and service providers comply with state laws governing business referrals, because some states have recently required that introductions or referrals be documented in writing, and that a service provider’s license number be displayed.
“Our Trusted Service Provider program enables both of those things by default, ensuring that agents and service providers are both compliant and efficient,” dotlloop said.
Editor’s note: This story has been updated to include comments from dotloop on the Trusted Service Providers platform’s RESPA compliance, and to correct that the free version of dotloop does allow agents to control who they add to the loop.