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Old 07-15-2007, 01:46 PM
 
Location: Tampa Bay Area
169 posts, read 769,546 times
Reputation: 155

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I've read that there are some states in the US where it is not legal to pay or accept a referral fee from another licensed real estate professional (this assumes that the receiving or paying party is a real estate licensee or broker and is actively/legally licensed as a real estate professional in some state in the US - but not necessarily a Realtor).

Is anyone aware of a law against such in their state? If so, what states is this illegal in???

If you can point me to any web links on the illegality of the matter that would be great too! Thanks.
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Old 07-15-2007, 06:24 PM
 
Location: North Pittsburgh
353 posts, read 1,129,058 times
Reputation: 142
Read this:

Realty Times - Agent News and Advice
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Old 07-15-2007, 10:18 PM
Status: "No, I am your favorite agent." (set 6 days ago)
 
Location: South Metro Denver for 25 years
8,669 posts, read 19,313,007 times
Reputation: 4399
In all states paying a referral fee for business is illegal - a violation of RESPA.

In most states you may pay a unlicensed individual as long as they are a party to the transaction.

In all states it is legal to pay a referral fee to a licensed brokerage company.
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Old 07-16-2007, 12:11 PM
 
Location: Tampa Bay Area
169 posts, read 769,546 times
Reputation: 155
Thanks for the article Pghrea. Seeing as NRT is the largest referral engine in the business (Coldwell Banker) and the largest broker AND lending tree is now selling us back our clients and they are in the banking industry which controls the RESPA regulations I don't see it coming to an end...

2bindenver, I guess I didn't make it clear in my original post, My question was only regarding licensee to licensee referrals.

So CO is good and PA is good... and it looks like Iowa doesn't like it but puts up with it... but is there any state out there that doesn't allow LICENSEE TO LICENSEE referrals?
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Old 01-06-2008, 11:55 AM
 
4 posts, read 81,637 times
Reputation: 10
Default Digging up an old forum

Hi, All.

I have a question for the realty / legal experts.

Can you tell me if this program is 'legal'.

A Nevada Real Estate development is offering to pay a referral fee (up to 3000) to non-professional, locals for a referral. the payment will be broken up into 500 for a qualified lead, 500 for a contract and 2000 upon close. These are on multi-million $ units.

the non-professionals are simply locals who have frequent contact with the 'right' buyers. The fees would be paid by the developer, as designed. Leads would be provided directly to the Broker. THANKS!
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Old 01-07-2008, 07:53 AM
 
Location: Palm Coast, Fl
2,248 posts, read 5,907,099 times
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In Florida it is the broker who has to sign for the licensee that the referral is accepted. The referral fee has to go to the brokerage, not directly to the licensee. Is that your question? If the licensee can accept a referral on their own and get paid directly without the broker involved? In Florida, no.
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Old 01-07-2008, 05:05 PM
 
4 posts, read 81,637 times
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Quote:
Originally Posted by palmcoasting View Post
In Florida it is the broker who has to sign for the licensee that the referral is accepted. The referral fee has to go to the brokerage, not directly to the licensee. Is that your question? If the licensee can accept a referral on their own and get paid directly without the broker involved? In Florida, no.
i'm not sure if it is. I represent the marketing company. We're trying to design a referral program. Want to keep it legal.

What we're proposing is telling locals who have contact with the potential buyers to bring them by the sales center. If they go under contract, they'll get paid (500), with additional payment happening on close (2500).

The locals provide any leads directly to the broker.

Payment would come from the developer to the local, with no money funnelling through the broker, nor would the fees paid from developer to local reduce the fees payable to broker.

Does this make sense? Is this legal?
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Old 01-07-2008, 06:11 PM
 
Location: NW Las Vegas - Lone Mountain
15,756 posts, read 21,039,425 times
Reputation: 2661
Quote:
Originally Posted by Duke_II View Post
i'm not sure if it is. I represent the marketing company. We're trying to design a referral program. Want to keep it legal.

What we're proposing is telling locals who have contact with the potential buyers to bring them by the sales center. If they go under contract, they'll get paid (500), with additional payment happening on close (2500).

The locals provide any leads directly to the broker.

Payment would come from the developer to the local, with no money funnelling through the broker, nor would the fees paid from developer to local reduce the fees payable to broker.

Does this make sense? Is this legal?
You need to talk to RED. See NRS 119. This area in Nevada is fraught with regulations. I think that such scouts would have to be registered representatives...Nevada has a history of ugly RE sales which it has tried to stop by regulation.

Organizing these things can be challenging.
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Old 01-08-2008, 07:09 AM
 
4 posts, read 81,637 times
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Quote:
Originally Posted by olecapt View Post
You need to talk to RED. See NRS 119. This area in Nevada is fraught with regulations. I think that such scouts would have to be registered representatives...Nevada has a history of ugly RE sales which it has tried to stop by regulation.

Organizing these things can be challenging.
Thanks, Olecapt! i'll check it out right now.

Last edited by Duke_II; 01-08-2008 at 07:44 AM..
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Old 01-08-2008, 07:43 AM
 
4 posts, read 81,637 times
Reputation: 10
Default found the applicable law

NRS 119.181 Sales: Activities of registered representatives; application by registered representative.
1. No person, except a registered representative of the developer or a broker or salesman who has complied with NRS 119.180 may induce, solicit or attempt to have any person attend any offer or sale of subdivision property or any interest therein. A broker is responsible for the inducing and soliciting activities of his registered representative. The registered representative and the developer must comply with the same standards of business ethics as apply to licensed real estate brokers and salesmen. A registered representative shall not make statements of any kind concerning prices, interests or values of the subdivision property. His activities must be limited to inducing and soliciting persons to attend an offer or sale of subdivision property and handing out information approved by the Division and he shall strictly conform to the written plan approved by the Division pursuant to NRS 119.180.
2. Before engaging in any activities specified in subsection 1, each registered representative of the developer, under such regulations as the Division may promulgate, shall:
(a) Complete an application in such form and containing such reasonable information as the Division may require.
(b) Pay the fees prescribed in this chapter.
Ê Such a person shall be known as a registered representative of the developer and may not use the term “licensee.” Real estate brokers and salesmen licensed in the State of Nevada may function as registered representatives upon the completion of whatever application and the submission of whatever reasonable information the Division may prescribe, and upon the payment of the fees prescribed in this chapter.
(Added to NRS by 1983, 276)

so based on this... what we're proposing is very 'grey'. We're hoping that our locals that we're in contact with simply bring people by the sales center, which is somewhat of a social club. There, they'll encounter the sales team, but no sale offer is going to be made. Unless a conversation about the property is initiated by the prospect.

anyone hazard a guess to 'how grey' this is? we're not asking them to attend an offer, just be present where property information is available. Are we totally in the clear if we make them 'registered representatives'?

I realize this is specific interpretation of Nevada law, and i do intend to follow up directly with the state, but after surfing for a few days, i realize there is tremendous knowledge here and i do appreciate it.
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