Hi,
I am new getting into real estate and wanted to start of bird dogging till I get experience. Now, here is a situation I have come across.
I found someone who I thought was wholesaling who needs people to find him properties (motivated sellers with very little repair costs). I have asked him a few questions and he says he does not actually purchase the house nor does he put up any earnest money, he finds the buyers and they go through his lender. He deals with people looking to purchase a home with bad credit. Now, he is offering me as well as other people who find properties for him 50% of the profits made on the sale of the homes we send him.
If the deals go through we get a letter from HUD stating what the property was sold for and he sends us a check for our 50% commission.
My question is…is this legal as far as commission goes or would I be violating any RESPA laws?
I am also in NJ if that helps.
Be careful to be paid for locating or marketing. It is illegal for you to be paid commission unless you are a lic. realtor.
The way around it in most areas is to set up a marketing company. Mine is Isham Enterprise. The other party can pay you for marketing/locating.
The best way is to have them tag the transaction as marketing. There is no regulation in most states for marketing. You may want to check w/ your state to be sure. I hope this is helpful.
box2good - If you don’t mined what is this guy/gals name…it sounds very similar to something I came across a while back…PM me if you don’t want to post the name of the person…Basically I did the same thing this investor is doing…I worked great when the sub prime market was good…It comes down to flipping contracts basically. If you want pm me and we can talk details.
box2good…you need a list of a lot of active investors in order to birddog. Attend your local reia meeting, call “I buy houses” signs and ads, attend property auctions, drive through neighborhoods where there is rehabbing going on and stop and talk…go where other active investors are and ask them for their specific criterion…then go find them what they are looking for!
Chris