Paying for Leads?? Need Help!!

9 Replies


I'm finally serious about getting my feet wet wholesaling in my state of Washington after reading tons of books and listening to many BP podcasts on the subject.

I've been working on a website to help with lead generations and I was going to create a page stating "We Pay Cash for Leads That Close!" The idea was, I create a lead generation funnel by becoming known in my community for closing on deals, then pay the person who sent the lead out of my profit.

This got me thinking, is this legal? It seems to me from everything I've read that it is, but before I seek out a real estate attorney, I figured I'd post here as there is so much knowledge on this site. 

The reason I wonder if it's legal is if a finder's fee would be considered compensation to facilitate a real estate transaction, which would require a real estate license. Is this correct?

Does anyone do this?

It seems like it'd be an effective strategy if I built a brand in my small town and surrounding areas where people knew they could send me a lead of someone they knew, to make some quick cash if I closed on that deal.

Assuming this IS completely legal to do, it leads me to a couple different questions:

1. How could I keep from having random people out knocking on doors and pestering the neighborhood? What if this creates an environment where people I don't know are soliciting property owners in my name? Maybe I'm overthinking this. My goal would be to plant a seed in peoples' minds that "Hey, my neighbor needs to get rid of his property...I'll give him Brock's info!" 

I would NOT want to create an environment where people looking for a quick buck become a headache around the neighborhood and consequently relating back to me.

2. Should I encourage people to have the owner of the property contact me or would it be better for me to cold call the property owner based solely on the information the lead gave me?

Thank you so much for the help.

Have a great night!


So you want to wholesale by sourcing leads from other wholesalers.  This is known as daisy chaining, I am never a fan of cold calls so I'd go with just getting your name out there.

Not sure about the legal aspect.  Always consult an attorney.  

1) I think you're overthinking it.  

2) I like the warm handoff.  If they just say "call so in so" that is NOT a lead.  That is a tip.  A lead is, hey, here is my friend, bob.  He wants to sell his home  He'd love to meet you for coffee at Woods.  Would saturday at 2 work for you?

@Aaron K. I'm talking about getting my name out to community members, not particularly "wholesalers". My idea would be to put the word out in my community that any random person who brought me a lead, I would pay a fee to IF I closed. My community is fairly small and word of mouth travels really, really fast here. I was hoping I could leverage that so people would have me in the back of their minds if they had a friend or relative needing to sell, knowing I would pay them a fee. Not to mention, a $500 or $1,000 fee would go a long ways to the people in my area. What are your thoughts? Thanks for the reply.
@Robert Freeborn Gotcha. Do you know a process in which I could filter these warm handoffs from actual leads? Or would it be a better approach to follow up on all warm handoffs AND leads myself, then pay a fee to whichever one I closed on? I'm just trying to put the word out in the community that I'm looking for houses and willing to compensate ANYONE who brings me a deal. Thanks for taking the time to reply.

@Brock Lile so you are looking for someone to bird dog, this is tough tedious work that people who think they want to be involved in RE are willing to do, it is likely that you will get quite a few poor quality leads and a high burnout rate.  Anyone who has the skills to find deals consistently would just do it themselves. 

I understand that you are trying to get your name out there so someone thinks oh if I refer cousin Bill I'll get $500 but that would take a lot of marketing to be top of mind for that.

@Aaron K. thanks for the advice. 

That was exactly my thought process, to try and be top of mind for whoever has a friend or relative that needs to sell quickly.

I was just thinking since I live in such a small community where everyone knows everyone, I could leverage that instead of seeing it as a disadvantage but your reasoning makes sense. The juice might not be worth the squeeze.

Thanks again.

Not sure about legality but I want to say someone has to accept a 1099 for income > $600 as taxable. In CA leads can not be rewarded with a commission because the person is not a realtor. But a gift is OK. Line is thin.

@Brock Lile The handoff can be however you want.  Just make it clear.  I would say a conference call or a group text to at the minimum to set up the hand off, then take it to one on one after that.  OR you could prefer taking everyone out to lunch.  IDK.  Its up to you and what fits your business model and want your business to look like