Walter
A commission is usually paid by a seller to sell their home. This includes preparing a description of the home, marketing the home in the media, and doing the necessary paper work (offer to purchase,etc.)to get the home sold. A finder’s fee is most times paid by someone (an investor) to you for locating them a deal.
You do not get involved in the marketing or paper work to sell someone’s home.You just put an investor in contact with someone that wants to sell.
what would be the worst case - Posted by walter_IL
Posted by walter_IL on February 13, 2002 at 13:01:16:
scenario for me, if proper authorities found out that I received some money for helping an investor to find the house and purchase it? I do not have RE License. And I am in Illinois.
Re: what would be the worst case - Posted by Brent_IL
Posted by Brent_IL on February 13, 2002 at 22:42:47:
I think a point that needs to be made is that in this country most regulatory laws of this type are written either by special interest groups, or as a knee-jerk reaction to some tragedy or grand deception.
You can call what you’re doing anything you like. I believe that eventually you will run afoul of a real estate agent who will contact the NAR and the state. When they gang up on you it will be your legal fees mounting.
Remember that sellers sometimes lie about their relationships with present and former RE agents.
Perhaps, my concern about the Attorney General’s office is overkill.
Posted by Tim Jensen on February 13, 2002 at 15:48:06:
Walter,
I would just get the property under contract whether it be a sales contract or an option contract. Then just assign your contract for a fee. That way you can say you were a principal in the deal and not an agent.
I don’t think you have done anything illegal by taking a finder’s fee. The worst case scenario youwould owe income tax on the finder’s fee.You would not necessarily need an re licence.
I basically asked the same question earlier… - Posted by JohnBoy
Posted by JohnBoy on February 15, 2002 at 12:37:38:
Collecting a finders fee for locating properties for another would require a license. It would be pretty much the same as acting as a buyer’s agent.
Also, if your buyer decides to stiff you out of paying your fee it would not be enforcable in court if you are not a licensed agent/broker.
To get around this you would have to enter into a contract to buy the property as a principle and then sell your contract to another buyer by assigning it to them for a dollar amount agreed upon or by setting up a simultaneous closing between you, the seller and your buyer. This way you are a principle in the transaction which doesn’t require you to be licensed.
Also, by getting the property under contract yourself you could make 5 - 20 times the profit vs. being paid a measly $250 - $500 as a birddog fee! Why settle for only $250 - $500 per deal when you can make on average of $2500 - $5000 per deal or more in some cases by getting it under contract yourself and then assigning your interest over to another buyer???
Posted by walter_IL on February 13, 2002 at 13:14:30:
I have to be a RE agent to recieve finders fee.
So, I guess what I want to know is what if I sold a house for someone, got the commission, but was not licensed?
Now your getting yourself into an illegal situation.
You are not allowed to sell homes and collect commissions if you are not a licenced agent. As long as no one finds out you are most probably ok. But I would not make a habit of selling homes for people and taking commissions. If something goes wrong with the transaction you could be sued and would not have any insurance to cover yourself.
Posted by Rich[FL] on February 13, 2002 at 15:53:05:
Walter, I’m not an RE agent (but I used to be one in days gone by.)
Here in Florida (I’m paraphrasing here), if you commit an act of real estate (that is, you bring two people together for the purpose of buying/selling a house AND GET PAID for that action), then you are performing an illegal act. The law doesn’t make distinctions between being an agent, or bird-dogging, or anything else. If you collect the money, you can be fined, placed in jail, etc.
Notice that the person RECEIVING the money is the guilty party here, not the person PAYING the money! Also note that if you commit an act of real estate AND DO NOT GET PAID, no harm, no foul, no problem. (But why would you want to do that? ) Anyway, that’s the way the laws read here a few years ago. They may have changed some since then. While I haven’t “studied” the laws in other states, most of these laws are derived from a common source (English common law or something like that I think) and are very similar if not identical in most states. You need to check them out for yourself to be sure.
Posted by Suzanne on February 13, 2002 at 15:16:11:
A finder’s fee is just what it says. You find the house, and get paid for finding the house. This is commonly known as birddogging and used to find junker houses. Sometimes may find the owners names, but nothing further.
What you are doing is practicing RE without being a licensed agent, which is illegal in all states.
The difference between an agent and investor is that the investor has a contract with the seller either to buy or with an option to buy, and the agent doesn’t.
Even birddogging as I described above can be considered a grey area. Many investors still hire birddogs, since the only thing the investor is paying them for is to find the house.
Personally I believe it would be the same as paying someone to find people, find contractors, or even locate certain items when you don’t have the time to do it yourself. All you are paying for is the service they are providing and nothing more.
