Subject: File No. S7-26-07
From: David L Gilbert, CCIM
Affiliation: President - Penn Realty Advisors, Inc.

November 21, 2007

I have read the NAR exemption request and I have a simple point to make. First of all, I would like to state that I have been a real estate broker for 41 years, a CCIM since 1980 and I first obtained my Series 7 in 1982. I also held, at one time, a Series 24 and Series 65. They have all lapsed. Currently I hold Series 22 and Series 39, which are currently inactive (meaning they are not with any Broker/Dealer). Therefore, I am currently one of those professionals with dual capability. I am listed as a TICA member Other (real estate broker).

Referral fees are just what the name implies a fee paid for the referral of a prospective Buyer/Investor who completes a transaction for which the Buyer/Investor was specifically referred. When referring a Buyer/Investor, the referring agent gives up further interaction with the prospective Buyer/Investor (except for possibly being in the communicative link as the transaction moves forward, as a matter of courtesy).

The reasons for referring a prospective Buyer/Investor are varied, but mostly it is because the referring real estate agent does not feel qualified to handle the transaction or because it is within another jurisdiction in which the referring agent is not licensed.

Keeping this in mind, I disagree with the NAR positions that a real estate broker, commercial professional or not, should be involved in presenting a prospective Buyer/Investor with a TIC Security. The real estate broker is not armed with the ability, nor should he/she need to accept responsibility for, qualifying the prospective Buyer/Investor under the suitability requirements, nor explaining the nuances of a particular TIC Security. This should be accomplished by a licensed Registered Representative.

That being said, I do feel that the Investors best interest would be served with some arrangement for compensation for the referred business. The Tenant-in-Common transaction is a very old method of title in real estate (coming over on the Mayflower, I suppose), but the TIC, which we now employ, is far different than the Tenant-in-Common often used in family financial planning. Because of the real estate component of the TIC Security, it is a normal event for a real estate broker to be entrusted with a further responsibility of discovering a proper upleg to a Section 1031 exchange transaction, when in fact, the real estate agent was responsible for creating the downleg transaction. For a real estate agent to not consider a TIC Security for his Investors upleg would render him unprofessional. Like most RRs, the real estate broker wants to be compensated for his efforts. In a TIC Security his effort may be limited to referring the client to a trained Registered Representative, which is no different than the agent referring the Investor to another real estate agent with specific credentials and specializations in a non-security transaction.

I therefore am writing in support of the NAR Exemption, but with certain limitations.

1. The referring real estate broker should not be involved in the selling process.
2. The referring real estate broker should not be involved in determining suitability.
3. The referring real estate broker should not be involved in property inspections.
4. There should be a specific Form Agreement between the B/D and the real estate agents Broker Principal (Broker of Record) as to the specified fee. (It would be a good idea to create a ceiling and floor on the referral fee)