National Association of Exclusive Buyer Agents (NAEBA) operates as a Non-Profit corporation. Further, NAEBA Referral Service, Inc. is a 100% NAEBA-owned Domestic For-Profit (Business) Corporation in Arizona No 19566663 operating under a separate Tax ID with Gea Elika as its Director and Kenneth Reid as President. NAEBA Referral Service, Inc. operates a for-profit brokerage called Buyer's Broker of Arizona working under a License Number CO656331000 with a designated real estate broker Kenneth Reid. Why such a complicated web of companies?
NAEBA claims that it is a professional organization of real estate buyer agents and buyer brokers who only represent home buyers, designed to educate consumers.
In reality, NAEBA is an intricate web of For-Profit (Business) Corporations and brokerages designed to collect referral fees from all transactions it originates.
NAEBA Referral Service, Inc. provides referrals to brokers for an undisclosed fee, most likely set anywhere between 25%-40% of the agent's entire commission.
In this process, NAEBA makes a few dozen referrals each year in exchange for a lucrative payout. In 2016 NAEBA Non-Profit brought in $522,261 in revenue; where membership dues account for only $24,583. In the same year Non-Profit claimed additional $431,010 in revenue, classified as a Miscellaneous, this amount comes directly from NAEBA Referral Service, Inc., where office expenses are further split 50/50 and salaries are billed by the hour for actual hours.
In 2016 NAEBA Non-profit Corporation spent 82% of its revenue, or $483,192 for salaries, employee benefits, and other expenses. It is unclear what additional revenue NAEBA Referral Service, Inc. keeps on its own books without an obligation to publically disclose full amount as a private For-Profit Corporation.
These financial incentives clearly point to the process of collecting referral fees as the primary reason for NAEBA operations.
NAEBA collects fees where "agents only pay if there are a match and the consumer purchases a property." There are a number of problems with this process and, eventually, consumers end up paying higher commissions when working with real estate agents that NAEBA recommends.
When consumers submit information to NAEBA, this information is simply sold to real estate agents who are willing to pay for it with 25%-40% share of their commission.
This fee makes it hardly a free service for anyone since referral fees are inevitably passed down to consumers. More importantly, NAEBA applies this pay-to-play bias towards all matching results, meaning, only real estate agents that have agreed to pay a referral fee are displayed in match results for consumers.
NAEBA further audits all transactions because it needs to find out how much money real estate agents receive in commissions, inevitably collecting private details of consumer’s agreement for home purchase or sale.
NAEBA plays fees down to consumers while it rigidly locks every participating real estate agent into a referral fee attached to the back-end of every contract. As a licensed real estate agent that doesn’t perform any real estate services, or takes any responsibility for the transaction, it is not entirely clear how this process works under the Business and Professions Code in Arizona.
Clearly, real estate agents only sign-up with NAEBA because the price of the referral fee can be easily incorporated into their client’s agreement by way of excessive commissions. NAEBA receives the lowest score because this service is clearly biased and it claims to provide the complete opposite of what it actually does. NAEBA claims to help buyers, but in reality, it only makes the home buying process more expensive with unnecessary fees.
The best proof of NAEBA's flawed model comes from that fact that it remains absolutely silent on the issue of Buyer's Rebates. Why? Simply because informing consumers about these actionable savings eats directly into NAEBA’s bottom line – if agents that NAEBA recommends beginning to offer consumers fair pricing and rebates, NAEBA would no longer be able to collect excessive referral fees as part of its business.
Buyers should avoid using NAEBA referral service and negotiate directly with real estate agents for a competitive representation, or use services that offer consumers a clearly-defined 0% referral fee structure.