Legality Of Receiving A Finders Fee

7 Replies

I am looking to start a website to match real estate agents with people searching for apartments (similar to zillow, trulia, etc.). The real estate agent that I am planning on working with says he will pay me $30 for every email, phone number and name that I submit to him via the website. This is regardless of whether the leads end up closing on an apartment, the website would disclose that it is in no way a licensed real estate agent, it would not be involved in the actual transaction for any apartment and it would essentially serve as a marketplace for real estate brokers to purchase leads and be connected with potential customers. 

This would be operating out of Massachusetts.  

Thanks

I think technically it is illegal for a non licensed person to receive any kind of finders fee. The situation you described sounds like a grey area because it wouldn't be tied to any particular transaction, though I believe it still applies. 

I did just get out of the MA Salesperson class but I could be wrong, so I'd wait for someone else to chime in

Your leads sounds just like buying a name list (from any other source).

I Know government is crazy just now, but I was holding out for the rationality of Free Enterprise (oh what a dreamer hey).

I can't believe there's one sentence anywhere on such a prohibition.  (and please don't make a grown man cry - - it's so humiliating!)

A cousin of this issue has come up with regards to wholesaling in Massachusetts. In this case you are not listing the property but selling a lead. Are you selling these leads to other brokers or is this the brokers website/program type arrangement?

It may come down to how you represent yourself on the website and whether your name (or company name) appears on the site. Is it just "answer this ad if you are looking for an apartment" with no name or would it say "contact John Smith (broker) for an apartment"

As @Nick Montville  said, in Massachusetts, only licensed agents can receive a commission or finder's fee for "finding accommodations for prospective tenants".   Only a licensed broker can pay a commission or finder's fee.

As I understand it though, your website commissions would not be based on locating rentals.  You're commodity is people (leads), as @Douglas Snook stated.  In my opinion, you are in the clear.  It is always best to consult an attorney though, when delving into an area such as this.

Originally posted by @Douglas Snook :

Are you selling these leads to other brokers or is this the brokers website/program type arrangement?

It may come down to how you represent yourself on the website and whether your name (or company name) appears on the site. Is it just "answer this ad if you are looking for an apartment" with no name or would it say "contact John Smith (broker) for an apartment"

The website is starting off with one broker (even though it technically is a broker search engine) however it will grow to multiple brokers if it is successful this year. It is branded as a separate company and it distinguishes itself from operating with a real estate license on the homepage. In other words, we are not trying to trick consumers into thinking we are realtors...we are just matching them with licensed realtors. 

@Tom Jacobs Welcome.

Just do it and have an experienced RE/Biz Attorney help with how the compensation occurs.

Get ready to run real fast because by the time you keep fooling around with this 10 other people will actually be doing it;-)

Napoleon: "If we wait until we're ready, we'll be waiting for the rest of our lives, Start now!"

Originally posted by @Mike Hurney :

@Tom Jacobs Welcome.

Just do it and have an experienced RE/Biz Attorney help with how the compensation occurs.

Get ready to run real fast because by the time you keep fooling around with this 10 other people will actually be doing it;-)

Napoleon: "If we wait until we're ready, we'll be waiting for the rest of our lives, Start now!"

 Of the advice provided, this may be the wisest. The only minor change I'd make is to recommend speaking with a Real Estate attorney prior to engaging in the practice.