Re/Max denies title firm favoritism

Company says brokers not driven to First American

By Jeff Smith, Rocky Mountain News (Contact)

Monday, April 21, 2008

Re/Max International denied allegations Monday that some franchisee brokers didn't get customer leads or vacation points unless they used First American for title insurance.

Separately, Prudential Professional Realtors Inc. in Colorado Springs acknowledged it has a marketing agreement with a title-insurance company, but said the agreement is "above board," with brokers free to use other title companies.

The Colorado Division of Real Estate is investigating ties between real-estate brokerages and title companies and has subpoenaed Re/Max International, Prudential and nine other top Colorado real-estate offices.

Erin Toll, director of the Colorado Division of Real Estate, said Friday the investigation was prompted by an anonymous complaint referring to a dispute between Re/Max International and California-based First American.

Re/Max recently sued First American for refusing to pay the second installment of a $1.35 million marketing agreement signed in 2006.

Toll called the exclusive marketing agreement "suspect," and she's subpoenaed others because she's been informed that such agreements could be widespread.

"It looks like an attempt to influence or steer a franchisee to a particular (title) company," Toll said, adding such schemes can result in higher title insurance fees for consumers. "I heard information that certain (Re/Max) brokers don't get leads or points toward vacation unless they use First American."

Geoff Lewis, senior vice president of Re/Max International, said Monday he's "never heard anything about that."

Customer leads generated from the Re/Max Web site, he said, are rotated equally among franchisee brokers. "It's not tied to anything other than whose turn in the office it is," he said.

"I've never heard anything about vacation points or perks" being tied to a particular title company," he added. "That's not something we'd do."

Lewis has said Re/Max has 123 national marketing agreements, ranging from title insurance to yard signs, and that such agreements are standard in the business world, similar to a company paying the Denver Broncos for stadium advertising.

First American spokeswoman Carrie Gaska said the company didn't have a comment yet. In 2005, First American settled with Colorado over an alleged kickback scheme involving home builders and title companies.

Bill Havens, managing partner of Prudential Professional Realtors Inc. in Colorado Springs, said such deals are a small matter.

"It's a matter of convenience for clients," Havens said, and is voluntary. "Agents receive absolutely no compensation from the title company. It's all above board."

Havens said he had no problem with the scrutiny. "I know the commission is doing their job in trying to weed out problems."

smithje@RockyMountainNews.com or 303-954-5155