Legal to compensate a realtor?

[SCflipper]

I am wanting to email a few realtors in my area with information regarding them emailing me about deals they come across that meet my investment criteria, can I legally pay them for these leads? ex. If I tell them I will give them 10% of my assignment fee plus pass their business card along to the investors I sell to? Since re agents have all kinds of laws they have to abide to... Thanks

I live is South Carolina by the way if that matters.

[moreonrealestate]

I think it's totally legal to compensate the agent. As long as it's between you and the agent.

[DeeinAustin]

I don't think it's illegal, but if I were the agent, I'd disclose the compensation agreement to the end buyer to make sure they know they'd get paid for referrals. Check with your state's real estate commission to be sure.

[reiauctions]

It's definitely legal to pay an agent for leads.  In a sense you are hiring them as a buyer's agent and paying them directly instead of the seller paying them.  I don't see any problem with that strategy at all.

[Rich_in_CT]

What realtor wouldn't want a bigger cut of the action though? 10% of an assignment fee is nothing.  Why wouldn't they just work to sign up the seller as a regular client.  Doing deals like this may also put them in hot water with their broker and jeapordize their agreement with the broker.  Money coming in, broker isn't getting paid.....see the problem?

[SCflipper]

What realtor wouldn't want a bigger cut of the action though? 10% of an assignment fee is nothing.  Why wouldn't they just work to sign up the seller as a regular client.  Doing deals like this may also put them in hot water with their broker and jeapordize their agreement with the broker.  Money coming in, broker isn't getting paid.....see the problem?

Rich, this is true, but the types of properties I am seeking are ones that most realtors wouldnt want to list, therefore 10% of 5k-10k deals is good money in my opinion just for contact info, not to mention the listings they would get from my end buyers. I do see your point about the broker not getting paid, but passing this info on to someone else isnt getting him paid either, so it shouldnt even be of a broker's concern.

Thanks for the replies, I got the info I needed, that being it is legal.

[ericmedem]

Just dont pay the realtor directly, you can pay realtors for just about anything, but it has to run through their broker, meaning you would write there broker a check and he would write them a check.  Overall regardless of who you write the check to, you are not at risk the realtor is, so essentially you could let them make up their own minds

[Teksch]

I'm not sure of the other states, but in California the only one who can pay a licensed agent for real estate related work is the broker the agent is working for. If an agent accepts payment directly from someone else he is in danger of the Department of Real Estate taking his license.

[DeeinAustin]

You'd be paying the agent (their broker) most likely for representation, but I'm not sure birddogging or sending leads is considered licensee work since you are not representing anyone. If sending leads was covered under the real estate licensee act for your state, everyone would need a license for it, correct?

It's best to check with that state's real estate commission. Right now, there is a debate in Texas on whether birddogging is only for a licensee, which means bird dogs would need to get licensed. It's kind of a mess because of the gray area. Here's the link to our Texas Real Estate License Act-Occupations Code. http://tinyurl.com/yrwogw

[Teksch]

It may be a matter of debate in Texas but I think it is pretty well decided here. If an licensee sends out information on a property he is presumed to be doing it for gain.

The matter of agency ( and the disclosure of that agency) is required whenever a discussion of real estate is taken beyond a causual conversation. The sending of information is beyond a casual conversation.

Any compensation agreement has to be made with the employing broker - not the agent.

But, more to the point, how would an agent have any information on a property if it wasn't listed? Somebody had to list it for the agent to have access to the information.

[SCflipper]

I should have been more clear, tek you are right they wouldn't have any information on un listed properties, I am willing to pay them to call me as soon as they get a property listed before it goes on the MLS. They will be getting paid their commission by the seller but I want to be the first one to know about them, why would they do this for free? that's wh I was curious as to the legality of an relator accepting compensation for "pocketing listing"...

Im fairly new at this and have been finding deals myself, but was curious as to what can and can't be done, I want to do it the legal way.

[DeeinAustin]

If that's the case, the seller is paying the fee and not you. The seller is the one they are representing and they've already agreed to compensation.

You stated earlier that they'd get a 10% assignment fee for passing your card along. I think that's high anyway.

[truthseeker]

In Texas compensation related to practicing real estate is required to go through the broker.  Representation of a buyer or seller is not a requirement.  Most buyer's agents are paid through the listing commision paid by the seller as an example.  The requirement of the going through the broker is the broker is aware of the compensation.  The broker is in control of how it is paid.  After all the salesperson is just an extension of the broker.  Some say there is a debate about the need of a Texas license to do bird dog fees.    The only debate is between those who know it is illegal and those who wish it was not.  The rules & laws are very clear if any thing of value is paid that relies on the consumation of a sale a license is required.   A unadvertised, unexpected token gift of $50 is a specific exception in the law.  That rule was passed so if a friend gave you a lead and that produced a sale you could take them out to lunch or give them a token gift in appreication.  This is very clear if a salesperson is paying a bird dog fee to a unlicensed bird dog that salesperson could cost their broker their license.  The law does have a very short list of exceptions.  This is a common sense list of person's who do not need a license.  As an example if you own a property and you hire someone (Requirement is the person must be hired and issued a w-2 not a 1099.  An independant contractor arrangement will not be acceptable.) then the property owner can pay that employee any way you want.   

[DeeinAustin]

In Texas compensation related to practicing real estate is required to go through the broker.  Representation of a buyer or seller is not a requirement.   

Just some corrections.

1. The definition of broker representation is...that someone is represented.  In Texas, all agents/brokers represent the seller as a listing agent or subagent unless the buyer asks for representation via a written or verbal agreement. This is something few buyers know, which is why it's required to present the "information about broker services" form OP-K from TREC's website. There is also a form of representation called intermediary (dual agency in some states) in which the broker helps both parties. https://www.trec.state.tx.us/formslawscontracts/forms/forms-contracts.asp

Also, the broker isn't just there to move money around. When an agent "represents" you, it's on behalf of the broker. No listing or buyer representation is actually taken in the name of the agent alone.

2. The seller does not actually pay the buyer's agent. People say this all the time, which is *sort of* true since funds come from the seller's side on the HUD. Sellers pay the listing agent who then may split their fee with a buyer's agent. If the agent and the seller chooses not to pay the buyer agent fee, the buyer has to pay for their own representation.