I retired my RE license a few years ago.

My marketing efforts for investing turn up a lot of sellers who really don't need a quick close cash offer. They simply need to retail the property.

How can I legally refer those leads to an agent and receive a fee?
Thanks!

Having been in real estate you should already know the answer to that question!

Call your real estate commission and pose the question to them. That way, you're following the law and have a solid answer.

Gulf,
I have been told a bunch of conflicting methods. Just wanted to know what the pros' on here do.

As for the local Assoc of Realtors... thats a good one! They will take your membership check in the blink of an eye but it takes about 3 weeks and 20 phone calls to get an answer out of them.

Local assoc of realtors response to the above question.
AR "huh? you want to get your license?"
Me "No, I want to know how I can send business to one of your members but get a fee for my marketing"
AR "uh. You want a commission?"
Me "Who do I need to speak to regarding compensation issues"
AR "your broker"
Me "I have a question regarding compensation that needs to go through the AR. Who do I speak with? A legal question perhaps?"
AR "That would have to go through legal"
Me "Excellent, can you put me through please?"
AR "Let me get a message and I will see that xxx gets it"
Me "Thanks"

3 weeks and several follow up calls with no response.

I am pretty sure that it's illegal to collect any type of "commission" if you're not licensed. Charging agents a marketing "fee" may be a different rule. You would be just like those lead systems that charge agents on a monthly basis. You know, the ones that nobody likes.

If you're getting enough business calls from your marketing efforts, then why don't you just obtain your license in order to accept referrals? Why do you think we all have our licenses? Because we also want to receive commissions from our own business and referral business.

I'll have to second what Len said! He's dead-on. Since you've had conflicting advice, it's even more prudent to know and comply with your state laws.

Even if it takes "3 weeks and 20 phone calls to get an answer out of them", you will still be complying with the LAWS of your state.

Is it not worth it to be 100% sure of your legal position on this issue? An internet forum is not a place to get legal advice.

As for making numerous calls to your RE commission, why not send them an e-mail and copy everyone there, that you've talked to. Ask them to please let you know when you can expect an answer if they cannot give it to you immediately. I've done this and they seem to get back to e-mails quicker than phone calls (in my state). I recently had a question about file retention via digital method and they responded within 24 hours. It was nice too, as I had something on paper from them.

I wish you the best of luck & let us know how it turns out!

Ok Duds is getting things really messed up here.

Gulf is saying to call your REAL ESTATE COMMISSION you called the LOCAL REALTORS ASSOCIATION big difference.Those people do not handle law issues that is the state real estate commission that you need to call.

People mistakingly beleive that to have a liscense you have to be a REALTOR and belong to these state,county,and national organizations NOT TRUE.

All the real estate commission cares about is yo uhave met education requirements and pay your liscense renewal fee every few years that's it,oh and you usually have to keep refferal records and closing on file for 3 years at least in my state,in Tennessee the period may be longer.You might just have to pay a fee to get re-liscensed and then it's as simple as getting a 25 percent refferal fee being liscensed and sending the lead to an agent and when it closes you get paid.

Look up Jim Lee on here he has been in Tennesse forever and will know the state specifics.

good luck-no legal

Thanks for the email tip, I will give that a try.

As for re-upping my license, I would prefer not to for a variety of reasons.

#1 is liability. As an agent we are legally liable for things that are none of our business as agents. The courts have expanded the liability of agents way beyond the scope of the service we provide.

#2 is the Referral Fee rules. As a private investor, I can give a referral fee to anyone I want to. As a licensed agent, I can only give "referral fees" to licensed agents. That puts me at a disadvantage to other investors or agents who don't follow the rules.

Perhaps I titled this post incorrectly, Fee for Leads would have been a better title.

Thanks Super,
I was typing when you posted.

I have thought about reactivating my license for just that reason.

I have been "wasting" between 3-10 hot leads a month from sellers who need to retail a property but don't have an agent.

"If your situation changes and a cash offer with a quick closing makes sense, give me a call" line is fine when one does call back, but the rest could have been turned into a fee for leads.

All states are different but in Ohio, an agent isn't allowed to give more than $50. So flip it around and don't ask can you receive a fee but can the agent pay you one. I would wait 3, 6, 9 more weeks for the right answer because I'm guessing this is a very fine line and depending on who is running the board, opinion or interpretations may differ.

If there is a limit you may also ask is it worth the risk? If in Ohio, it is looking like $150-$500 per month. Risk vs reward?

This applies, as you're probably aware, more in the commercial field than the residential one, but it isn't unknown to arrange for the buyer to pay a "finder's fee" to anyone who's unlicensed but plays a part in bringing an offer to the table. You do need to connect with a licensed agent who's willing to work with you this way, not to mention a potential buyer client who's prepared to pay you "outside the deal." However, commercial sales often enough have this basis to them.
All that's really required is two things to avoid any illegality. One is a Letter of Agreement between yourself and the buyer (which the agent may well be able to put in place on your behalf). The other is an addition to the buyer's acquisition cost that, in effect, allows for your payment over and above whatever actual offer purchase price is decided upon.
When it comes to residential sales, this approach is, of course, usually not practical, save for any significant apartment or office buildings -- which are likely to be listed commercially in any case.

Duncan

My understanding is that you can charge a fee for a lead, but what you can't do it get a portion of the commission without a license. So if you found an agent that wanted to pay you $X amount for each lead you gave them, you could do that, but you can't ask for 20% of the commission or even a bonus/larger fee for those leads that actually turn into a closing. As Gulf & super said, call the REC and ask them.

Depends on the state you live in, but in general no you cannot receive referral fees/commissions. But in many cases, you can submit invoices to the title agent for marketing services.

OHAgent, one of my instructors said that in Ohio the limit is like $50. Is this wrong?

perhaps you could get a family member licensed and put the fees in thier name.

During all of my training we were told to only give non licensed people gift cards of $50.00 value for referrals. At our office thats exactly what we do, once a deal closes the referring person gets a $50.00 pre-paid visa card.

technically, even a $50 fee could come under scrutiny

In NY you can't pay anyone anything from the proceeds of a transaction unless they're licensed... Like OHAgent said you can however pay an upfront fee to someone for a lead they have provided you but it can't have anything to do with whether or not the lead turns into a deal...

Dan Ortiz ABR CRS CREOS (Hablo Espaņol)
Licensed Broker/Owner
Manor Gate Real Estate of NY Inc

"If you think hiring a professional is expensive, wait till you hire an amateur" Red Adair

Duds

There is a way, and as an investor it should dawn on you sooner or later. And it works in every state I've invested in. Of course in my case it's not a problem because I have a broker's license and a referral fee is not a problem for me to receive.

I'm only posting this to keep you thinking, and I'm not revealing it now because I don't want every investor I've helped with this to now have a ton of competition, including me. At least until I've left this planet.

So when it dawns on you, use it and don't broadcast it, which may be hard for you because you sell a course.

Well, I would like to know how b/c that would be a great way to motivate my in-laws to think of me when someone says that they are selling a house! Heck, I was even thinking their kids could be a great referral source (more motivated for lower dollar sums that can pay for ipods, summer camp, the latest techno gadget, etc) and I would certainly pay for the leads. I know there is a law on this and I should know what it is ... I'm just too lazy at the moment to look it up.