Legality of a referral fee
3 Replies
Jeremy Resmer
Rental Property Investor from Nashville, TN
posted over 3 years ago
We come across a lot of deals and can't monetize all of them. Our LLC members are working on RE licensing in house, but wanted to explore other pathways in the mean time.
Anybody know of smart ways to be able to legally charge a referral fee for a property when not licensed?
I don't want to go the "marketing fee" route. We are located in Tennessee, and I know that wouldn't work.
The one potential pathway we're exploring is to hire a realtor//broker 1099 or even give them a percentage of our LLC. If that were the case, could our entity charge referral fees for properties? There's important nuance in the question:
1. Is it even possible?
2. If so...could it be realtor or would it need to be a broker?
3. If so...would said broker/realtor need to be partner in the LLC or would a 1099 arrangement be sufficient? IF partner...what percentage?
Any advice appreciated!
Charlie MacPherson
from China, ME
replied over 3 years ago
@Jeremy Resmer This will depend entirely on your state laws, so most of us here can't give you an accurate answer.
This is a case where it's worth spending a few bucks on an hour of an attorney's time.
Russell Brazil
(Moderator) -
Real Estate Agent from Washington, D.C.
replied over 3 years ago
How about just getting a license so you can get the referral fee?
Jeremy Resmer
Rental Property Investor from Nashville, TN
replied about 3 years ago
Thanks guys ... should have RE License soon! Just had a couple deals in the mean time that we'd like to refer. Just going to send them out for free ..... hopefully it comes back around ;).