What do you think about this offer?

Question

A friend of a friend approached me with an offer:
He will get me leads on properties that I have for free! Yep Free! 
But …. If a sale is made for one of his leads he wants 1%.
What do you say? Would you make a deal like this one?

Phil Z. · Answer

Even if you are licensed, all commission need to go through the broker.. they can not be direct to the agent.

Karin Crompton · Answer

I would echo what Kenneth Estes and Phil Z. say. In CT, they would consider this practicing real estate without a license, and you could find yourselves in hot water. Only licensed brokers can receive commission, which it sounds like he's essentially proposing.

BUT - Phil makes a great point about paying per lead, not as a percentage of the sale. Just make sure to check your state's laws so you're clear on what's allowed! There are various ways to reimburse someone for helping you out, but you've gotta make sure you're not treading into territory where you're acting as licensed brokers or salespeople, whose actions are governed by state and federal laws - hence, the reason you can't act like one without being properly licensed. (I hold a salesperson license in CT.)

Good luck on the potential partnership!

Phil Z. · Answer

Unless your friend is a real estate broker .. they can not get paid based on the sale of the home.  But they CAN get paid per-lead if its not tied to the sale. (at least in Connecticut)

Kenneth Estes · Answer

Hey Shane,

The easiest way to figure this out is by looking at what other options you have.

What your friend is offering to do is part of the job description for a real estate agent.  Agents also do a lot of other things like: show the property, determine listing price, take photos, recommend work to be done, etc, etc.

All agent fees are negotiable, but I've generally seen them around 6%.  So, if you're friend helps sell your home, do you think he's done 1/6 the work of an agent?

That's for you to determine.  I don't know the ins and outs of how this guy is going to publicize your home or if he's going to show it.

If your friend does not have a broker's license, you're going to want to be really really careful.  Check your state's laws and see what he is and is not able to do without a license

Cheers,

Kenny