Iowa Real Estate Practice Exam

Is it permissible for a salesperson to refer buyers to a lender who pays fees for such referrals?

1. Yes, as long as it is disclosed

2. No, acceptance of a fee from a lender violates Iowa code

3. Yes, if the buyers request it

4. No, unless a written agreement is signed

The correct answer is: No, acceptance of a fee from a lender violates Iowa code

The appropriateness of a salesperson referring buyers to a lender that pays fees for such referrals is governed by Iowa code, which aims to ensure that real estate practices are conducted ethically and transparently. Accepting a fee from a lender for referrals can create conflicts of interest, where a salesperson may be incentivized to suggest certain lenders based on the referral fee rather than the best interests of the buyers. Under Iowa law, it is considered a violation to accept fees from lenders in exchange for referrals. This policy helps protect consumers from potentially being misled or steered toward less advantageous loan options based on financial incentives rather than merit. The legal framework is designed to ensure that referrals are made based on professional judgment rather than financial gain, thus promoting fair and honest business practices within the real estate industry. In contrast, other options may suggest conditions under which referrals could be permissible, but ultimately, the law prohibits any such arrangements based solely on financial compensation from lenders, setting a clear standard that maintains the integrity of both real estate professionals and the lending process.