Posted by GL on December 14, 1999 at 15:12:31:
I don’t know about California so I will speak more generally.
You can employ real estate agents to find properties and you can pay them a finder’s fee. It would be up to the agent whether you gave the check to him directly or to his employer.This is perfectly OK.
The sticky part would be if the agent referred you to one of his own listings. If he collected a fee from both sides of a transaction there would be a clear conflict of interest.
Here is an example. You buy a house from Mrs. Seller. She has the place listed with Miss Agent. Miss Agent collects her commission from Mrs. Sellers and $500 from you.
You are happy because you negotiated a really good deal.
Three years go by. There is a real estate boom and the house is worth twice what you paid for it. Isn’t that nice!
Mrs. Sellers sees how much her old house is worth and gets mad. She should have got a lot more money. She has been cheated. So she gets a lawyer and sues you and Miss Agent for damages. She can prove you two were in cahoots to deceive her about the value of the property because of that $500 payment. She depended on Miss Agent for advice about the state of the real estate market, value of the house etc. and you two sharks took advantage of her.
The jury gives her a whopping settlement. Miss Agent has no money. Guess who pays?