Hi all hopefully someone can give me a little insight, so I do independent work for a company that I find buyers for, for a fee, so if I find a buyer, can I also charge my buyer a finders fee if they are willing to pay one?
I don’t know what state you’re in, but in most states, this is illegal as you are acting in the capacity of a real estate agent without a real estate agent license.
That said, most investors I know do one of two things- they ‘bird dog’ for a fee (I have no idea how they do this legally,) or they wholesale, where they find the house, negotiate the price with the seller, write a contract to buy the house, and then sell the contract, and this I know is legal.
Hope that helps.
So basically what you are saying is bird dogging is illegal?.. Because essentially that is what I am doing, finding properties for a fee. And I am in NC
The local Real Estate Boards impose regulation relevant to the distribution or aid in distribution of a homestead with the intent to protect the consumer (and in some rare cases monopolize the marketplace).
Whether or not this legislation is put into place in a criminal or a civil context, it does appear fairly evident that the enforcement of this legislation would be limited to that of:
a) When a consumer is being blind-sided (ie: you are acting on his or her behalf without proper licensing and steering him/her wrong)
b) You are continuously taking a “fee” for selling real estate.
If you are working with an investor, and you are paid by the investor, who has experience in real estate transactions, and you are not party to that transaction (ie: a consultant) you should, be ok, for the following reasons:
You are taking a fee for selling information, not real estate (nobody can prevent you from charging $5.00 to tell him or her were the nearest gas station is, or where the nearest “deal” is)
Even if legislation was in place to protect the consumer, you have conducted no harm to the consumer…so in a semi-perfect world, you can indeed pay for a lead on a house!
I think it is important to know, most investors are opposed to the local Real Estate Boards attempting to corner the market on Buying/Selling properties, I am certainly of the opinion that the local Boards would like to see no investors/creative RE at all so that they can continue to take a small chunk out of every property sold and have the properties sold according to their “rules & regulations”.
There is also such a thing as a simple Partnership Agreement, thereby making you and the investor principals in the transaction. The Bird Dog is bought out of the Partnership by the investor, thereby violating no State Statute.
John $Cash$ Locke
Awsome $Cash$ Well said :beer sounds like Im good
john’s answer is on the right path but if taken wrong can put you in the hot seat. Be sure you check with the right people. As an investor and a broker for years I have seen to many investor wannabees cross into the land of wrong doing under state statutes and cry when nailed. Most often violators are not caught because the other party involved is unaware of the law.
One area often violated is that of working with buyers when you are not a principle in the transaction and wander into the area of implied agency. And even if you are a principle in a transaction you can’t tell a buyer not interested in your deal you will find something for them because you are not a principle at that moment and if that buyer thinks you are acting for them you just found out about implied agency and it doesn’t matter what you think, the law only concerns itself with what the buyer thought.
Many schemes have been used and the users nailed, one was using a power of attorney as a way around licensing requirements, and the users paid a heavy price. As the state of California said, Disguised Agency is still agency and requires a active license. And now states heavy in debt are likely to discover getting more involved in many areas of enforcement may be a good source of revenue.
Also there is a chance of the eager ambulance chasing attorney finding out that following up on closed transactions where no agent was involved could be a source of new fees. Just like they did when California passed it’s equity purchase laws to control investors buying properties in foreclosure, investors and agents paid for violations they normally would have gotten away with when the attorneys started following up on those deals, and then getting the former owner as a client.