Paying private individual for leads on sale of property? (agent, closing, fee)

[anonusr]

Is it legal, in any way, to pay an individual (unlicensed) for bringing a lead (in New York State)?

Options:
1) Developer with an unlisted property pays a citizen who brings a buyer a flat finders fee ("thank your friend")

2) Developer pays a broker for closing the deal with the buyer AND pays citizen a finders fee for bringing a buyer (pays the individual who brought the contact info to the broker)

3) Developer pays a company a marketing fee once a property is sold, company pays citizen a finders fee for finding a buyer

4) Developer pays a company a fixed fee for marketing (whether sold or not) company pays a citizen a finders fee for finding a buyer

I've read through some law, and called a few lawyers - most seem to only say "no", seemingly more so out of fear than any specific research or cited law. I'd like to read the reason why for each of the above, if it is know to you, so that I can be sure to avoid and potential pitfalls.

Please let me know if you've worked out a way to pay a "friend" for their service in bringing a buyer to a developer/owner.

Any links you can share, or forums/forum posts would be helpful!

thanks

[MikeJaquish]

You are in the RE Professionals forum.
If any of them are stupid enough to say they break the law, then they deserve to lose their license.

But, for a significant finders' fee I will dig up the North Carolina statute for ya!

And a developer would be nuts to open up that liability mess for a sale or two.

[anonusr]

I asked for "any way in which it would be legal". I understand buying leads, presumably in bulk, is legal. I'm trying to understand where the boundaries stop.

If someone provides a contact, and that contact turns into a sale, who can compensate that someone and on what grounds (what is the process). Looking for developer->friend, or developer->agent->friend.

thanks

[anonusr]

Seems to me that if a developer wanted to pay a consulting fee to a friend who brought a buyer, they could do so as ordinary citizens, so long as the income was reported as a 1099.

[JustJoy]

Originally Posted by anonusr

I asked for "any way in which it would be legal". I understand buying leads, presumably in bulk, is legal. I'm trying to understand where the boundaries stop.

If someone provides a contact, and that contact turns into a sale, who can compensate that someone and on what grounds (what is the process). Looking for developer->friend, or developer->agent->friend.

thanks

There are 2 threads going here on the same topic: Essentially, how can an unlicensed person be compensated (paid a referral fee) on a real estate transaction that results in a sale. In this post, I'm just going to cut to the chase.

Pay an attorney a small amount of money for sound legal advice FIRST or do what you want and possibly require the services of a good defense attorney - and as a former paralegal for criminal and civil litigators, they just love those billable hours - can you say 'cha ching'. So just talk to an attorney FIRST to see if you can legally do this or face the piper comin' a callin' later.

[MikeJaquish]

"Bringing a Buyer" is a brokerage function. Pay licensed brokers.

Selling leads is a scumbucket function. Pay the scumbucket. Up front. With no stipulation of closing a transaction.

It would be nuts to pay a commission, a finder's fee if you will, off the HUD1 statement. And it would be foolhardy to engage an untrained, unlicensed salesperson to broker buyers with the liability that endeavor entails.
So, if the nutty developer says he wants his cozy little row of quaint "family-friendly" loveshacks kept white as rice, and some amateur bird dog goes along with it, who picks up the Fair Housing tab?