Finder's Fee for Non-Agents Illegal?

Question

Hi you guys. I'm a wholesaler out in the Milwaukee area. I was recently talking to a real estate agent about an REO property he had listed. I asked him if I found an investor that would be interested in buying it would he be able to pay me a small fee. He said no, because I'm not a real estate agent.

But I've blogs  that said that I could get a fee from an investor friendly real estate agent.

What's real and what's fake you guys. Or am I missing something? I get leads and I have good contacts. Can wholesalers get paid for my referral services in a way that I don't know about?

Dawn Anastasi · Answer

Find properties that are not listed on the MLS for the world to see, get them under contract, then assign the contract to an investor for a markup (but a list price that makes sense with the amount of repairs needed).

This is not an easy job.

Brian P. · Answer

@chris martin

What you don't know you don't know and I do know California. As an investor there since 1955, and a real estate broker since 1965 and paying finders fees that passed the occasional department of real estate audits during those years, you will need to amend your opinions regarding California and a few other states. Humans can be paid a finders fee in California.

Chris Martin · Answer

@Brian P.  Quite interesting. It's always good to learn new stuff. I've posted in other topics (e.g. http://www.biggerpockets.com/forums/93/topics/139634-is-illegal-to-pay-referral-fees-to-non-realtors?page=3 my July 27 post) about similar circumstances in other states where the outcome was different. The best legal description/argument I've found to date is the following case. There is a lengthy discussion comparing and contrasting the "broker" and "finder" parties and their role in the transaction in the court case described here:  http://law.justia.com/cases/new-york/other-courts/2010/2010-20104.html

While I realize this does not apply directly to the topic at hand (Wisconsin), I and other BP members in other states should find it very informative and educational. Upshot to readers: Know your state laws and real estate commission rules and how your state handles similar cases.

Chris Martin · Answer

Wisconsin (where Vanessa is from) statute seems clear to me.

https://docs.legis.wisconsin.gov/statutes/statutes/452.pdf

452.19 Fee?splitting. No licensed broker may pay a fee or a commission or any part thereof for performing any act specified in this chapter or as compensation for a referral or as a finder’s fee to any person who is not licensed...

The statute in this great state even cites relevant case history.

Robert Taylor · Answer

As far as I remember, the answer at least here in WI is a solid NO! They even have very tight rules as to what our assistants can and can't do, such as if I were to hire a non-licensed secretary or whatever. I'm sure if you sent an email to the WRA (WI Realtors Association) they'd give you the run down!

Wayne Brooks · Answer

Florida specific, and aome other areas----Perhaps an over looked dinstinction:  I, as an agent (or a non agent) can pay a referral fee for a Lead, but it can Not be dependent upon whether a sales transaction occurs.  I can Not pay a fee dependent upon a property closing, nor can a non licensed agent receive such a fee from anyone.  However, as discussed adnauseum before, it is not specifically illegal for a non licensed person to Pay such a fee, but it is illegal to Receive such a fee.

Paul Ewing · Answer

I think in most states it is illegal.  I know in Texas it is.  Look up your states rules for activities requiring a real estate license.  Many you have to have a full Brokers license not just a Sales license.

George Rodart · Answer

I understand that you can obtain a fee for introducing  buyer or investor to an owner of a property. Your contract is with the owner , not the agent. That you state in your finder's fee contract with the owner that your sole function is Only introducing the buyer or investor to him/her. No more , no less. You are not negotiating the procedure of the transaction. That is the function of the agent, broker, and property owner. If the owner has an exclusive right to sell contract with the, but you have found RWA buyer/investor, the owner by law has to pay them, too. That's why realtors have these contracts. Of course they tell you it's illegal- that's work ! However, if you Only introduce them to the owner and Not get involved with any of the process.you get your finder's fee.

Real Brokers and agents are just mediaries. There are companies that invest in properties - they may pay you a finder's fee for just obtaining the contact.

If they say no, look for someone else. You have an owner that wants or needs to sell his/ her investment.

Rich Hupper · Answer

I have a follow up question about this. Suppose you have a wholesaler with a purchase contract ready to sell to another buyer. That buyer and wholesaler were brought together via a 4th party. If the buyer is an investor and or company, and no fiduciary relationship has been expressed or implied,  could they pay the 4th party a finders fee without any legal implications?

Account Closed · Answer

Thank you guys all for your feedback especially @Robert Taylor. I feel solid in knowing that from another real estate agent. I guess I'll just let my dream of being paid for referring go as I'm not looking to be a real estate agent. *sigh* lol

Thanks you guys. & Please no fighting :) Everyone is just trying to help each other out.

Finder's Fee for Non-Agents Illegal?

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