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Yep. Finding a buyer for a house you don't own is considered "real estate activity" in Oregon. Anyone that accepts payment for real estate activity has to be a real estate licensee.
GF, I would look up the statute that defines real estate activity in Arizona. That should give you the definition used to determine who can be paid for real estate activity.
In Oregon your friends on FB would be welcome to send you a buyer, they just can't be paid for it.
Thanks, SF! More info to file away in this old brain of mine
I researched the Arizona Revised Statutes (Arizona Revised Statutes) and finder's fees are not mentioned for real estate except for renting (it is allowed) and Time Shares (it is not allowed).
I did, however, find this on compensation:
32-2163 A. It is unlawful for any licensed broker in this state to employ or compensate, directly or indirectly, any person for performing any of the acts within the scope of this chapter if the person is not also a licensed broker in this state, or a salesperson licensed under the broker employing or compensating him, except that a licensed broker in this state may pay compensation to and receive compensation from a broker lawfully operating in another state.
Note that it applies to licensed brokers, not to home owners.
I have not heard back from my agent yet; I am assuming no news means no problem, but I will post anything I do hear.
Just ask your agent to ask a RE attorney. They'll probably tell you for free.
From my reading of the AZ Real Estate Law Book published by state of AZ, it is illegal to perform the acts of a real estate agent without a license, including giving compensation to an unlicensed person.
32-2122 (B), "It shall be unlawful for any person, corporation, partnership or limited liability company to engage in any business, occupation or activity listed in subsection A without first obtaining a license as prescribed in this chapter..."
Subsection A defines persons acting in the capacity of a Real estate salesperson among others.
So it appears illegal for the OP to offer compensation to one of their friends to procure a buyer.
From my reading of the AZ Real Estate Law Book published by state of AZ, it is illegal to perform the acts of a real estate agent without a license, including giving compensation to an unlicensed person.
32-2122 (B), "It shall be unlawful for any person, corporation, partnership or limited liability company to engage in any business, occupation or activity listed in subsection A without first obtaining a license as prescribed in this chapter..."
Subsection A defines persons acting in the capacity of a Real estate salesperson among others.
So it appears illegal for the OP to offer compensation to one of their friends to procure a buyer.
That doesn't explain why.
Misrepresentation, fraud, Fair Housing issues all are part of the basis for the regulatory posture.
And, again, it is ill-advised for a principal to encourage someone without documentable conversational awareness of those issues to have involvement in the transaction.
From my reading of the AZ Real Estate Law Book published by state of AZ, it is illegal to perform the acts of a real estate agent without a license, including giving compensation to an unlicensed person.
32-2122 (B), "It shall be unlawful for any person, corporation, partnership or limited liability company to engage in any business, occupation or activity listed in subsection A without first obtaining a license as prescribed in this chapter..."
Subsection A defines persons acting in the capacity of a Real estate salesperson among others.
So it appears illegal for the OP to offer compensation to one of their friends to procure a buyer.
But I am not "performing the acts of a Real Estate Agent." In fact, it is specifically ILLEGAL for an AGENT to pay a finder's fee but it is NOT specifically illegal for me to seek buyers for my home by offering a finder's fee separate from and in no way binding to the contract(s) with the RE firms/agents.
I can sell my own home - is that "performing the acts of a Real Estate Agent?" Of course not.
I can even sell my own home while listed with my agent! I read the contract. The exclusivity clause means that I cannot list with multiple agents. I can sell on my own at any time - but who would do the paperwork? In my case, my agent and I would compensate her at the percentage to which we have agreed. If I sell on my own and a buyer's agent is involved, I negotiate the fee with him/her for his/her services. If the buyer has no agent, my agent will do the paperwork for a reduced percentage.
We have all this down on paper.
Apparently other agents in other parts of the country are not so open.
I believe your interpretation of the law is highly subjective and, IMO, incorrect. I'll ask my brother, a lawyer.
Last edited by GuyFriendly; 11-22-2009 at 01:00 PM..
But I am not "performing the acts of a Real Estate Agent." In fact, it is specifically ILLEGAL for an AGENT to pay a finder's fee but it is NOT specifically illegal for me to seek buyers for my home by offering a finder's fee separate from and in no way binding to the contract(s) with the RE firms/agents.
I can sell my own home - is that "performing the acts of a Real Estate Agent?" Of course not.
I can even sell my own home while listed with my agent! I read the contract. The exclusivity clause means that I cannot list with multiple agents. I can sell on my own at any time - but who would do the paperwork? In my case, my agent and I would compensate her at the percentage to which we have agreed. If I sell on my own and a buyer's agent is involved, I negotiate the fee with him/her for his/her services. If the buyer has no agent, my agent will do the paperwork for a reduced percentage.
We have all this down on paper.
Apparently other agents in other parts of the country are not so open.
I believe your interpretation of the law is highly subjective and, IMO, incorrect. I'll ask my brother, a lawyer.
There are several type of listing agreements. There is the Exclusive Right to Sell contract where you list with one agency and commission is owed regardless of who finds the buyer. There is the Exclusive Agency contract where you agree to list with just one agency, but maintain your right to sell it on your own without paying a commission (this is how many of the limited rep companies do contracts) and then there are Open Listing contracts where you can list with several real estate companies.
So what you can or can't do depends on what type of contract you have. Regardless of the contract, sellers can always chat up the sale of their house and try and find a buyer. If you have the ERS contract it just means your agent gets their fee regardless.
Yes, of course you can sell your own home. YOU can procure your own buyer. What you can't do in many states is pay a non-licensed person to procure the buyer for you. That is the issue at play here. It's not about you finding a buyer on your own.
oh and just to be clear...in Oregon it would be the person receiving the $1,000 that would be committing the illegal act. Not you. We have civil fines that they would be subject to. They way the laws reads here is that you would be paying that person for a real estate service (procuring a buyer), since they don't have a license to practice real estate, they would be committing an illegal act by taking the money. They can do this act without getting paid. It's the getting paid for real estate activity where the law kicks in.
I'd be surprised if AZ wasn't the same way since most of the Western states are very similar with our real estate laws.
oh and just to be clear...in Oregon it would be the person receiving the $1,000 that would be committing the illegal act. Not you. We have civil fines that they would be subject to. They way the laws reads here is that you would be paying that person for a real estate service (procuring a buyer), since they don't have a license to practice real estate, they would be committing an illegal act by taking the money. They can do this act without getting paid. It's the getting paid for real estate activity where the law kicks in.
I'd be surprised if AZ wasn't the same way since most of the Western states are very similar with our real estate laws.
So, with no contract in place, they can bring me a buyer. I tell them thanks. Then I give them $1,000 and tell them it is because I like them so much.
So, with no contract in place, they can bring me a buyer. I tell them thanks. Then I give them $1,000 and tell them it is because I like them so much.
End of problem.
I'm sure the law would care if they found out. At any rate, if you weren't going to listen to the answers I'm not sure why you asked the question. You received some good advice, but allow me sum it all up here.
You have an exclusive right to sell which prohibits you from doing certain things. Arizona does not allow payment to non licensed individuals involved in a RE transaction. Because you have a ERTS contract with a RE company, paying a "finders fee" is also illegal.
You can find your buyer. There is small possibility your finders fee will produce a buyer. There is good possibility nobody would ever find out if you paid a finders fee off the record. It is illegal. Proceed at your own risk. You should inform your agent out of respect seeing as you are putting them at risk.
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