Splitting Commission

I’m puchasing a six (6) unit condo building under my corporation name. The seller is using a real estate agent, is it possible that “I” represent the Buyer (which is my company), and split the commision with the agent although I’m not a licensed real estate agent? I’m not sure where but throughout my commercial investing research, I remember reading it was legal to do so. I have always purchased and currently hold 2-4 unit buildings (categorized as residential) which it’s not possible, but this is my first commercial investment and was curious. If possible, I feel it’s a great way to build my reserves FAST!

As far as I know (and I’m a licensed agent in my state) there is no way for a licensed agent to pay an unlicensed individual commissions; the fact that the deal is commercial is irrelevant.

Per the Real Estate Settlement Procedures Act, any payment made to another settlement service provider (except a licensed broker or agent), in direct exchange for a referral, is prohibited (i.e. illegal).

Now, this is rarely enforced. The intent of the law is to prevent harm to the consumer. Still, you would be breaking the law.

However, if a referral fee was given to an unlicensed person “spontaneously” (as in he was never promised anything), then this would be legal. Interesting loophole, I know.

RESPA does not cover commercial transactions.

I learn something on here everyday! wait, where does that leave us…?

Skip worrying about splitting the commission. The rate paid in commission is a negotiable part of the contract. If the listing agent is not willing to negotiate then tell them you will get a buyer agent.

Sounds like a good chance to build a relationship with a RE agent by not trying to get a kickback on this deal or any other deal. If he knows he can get his full commission by dealing with you he’ll bring his properties to you first.