Is it legal to offer a finders fee while Wholesaling

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Is it legal to offer a finders fee while Wholesaling

Nick Webb

Investor · Lahaina, HI · Member since 2018 · 11 posts · 3 votes

Is it legal to pay a finders fee while Wholesaling?

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Jerryll Noorden

Flipper/Rehabber · Wilton, CT · Member since 2015 · 4k+ posts · 4k+ votes

Originally posted by @Frank Hinck:

@Jerryll Noorden

Stop trolling after my comments trash talking my opinions or I’m going to Report you. This is supposed to be a supportive site for all opinions.

Dude I agreed with you.

I even voted for your response.

You have some issues bro!! Go get it looked at!
I don't give a damn who or what you are. If you give bad advise I will correct you and if you give good advise I will vote. Stop making everything about you.

As for trolling you or anyone...

I live life with her!

Dude she violates me day and night. After she is done with me she sends me to the kitchen and slave on the stove. I have no time for trolling bearded men.

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Frank Hinck
Rental Property Investor · Minneapolis, MN · Member since 2020 · 540 posts · 285 votes
6y
@Nick Webb
Of course, networking and referrals is the world wholesaling is built on
0 Reply
Nick Webb
OP
Investor · Lahaina, HI · Member since 2018 · 11 posts · 3 votes
6y
@Frank Hinck
Thank you, I saw some debate wether it was legal if you were a realtor.
1 Reply
Mike CumbieBusiness Member
REALTOR® · Brockport, NY · Member since 2015 · 3k+ posts · 4k+ votes
6y
Hi @Nick Webb
I'm a big "You do your thing" type of person so what I am saying isn't mean to be mean or argumentative. Just my thoughts.
Each state and licensing organization will vary.
I recommend everyone I know to get a RE license. Pay the couple hundred dollars, pass a test. Then from that moment forward everyone they meet, recommend to me. I can legally pass referral fees out like they are candy to any licensee (They never have to show a house or put up a sign, pay for MLS access or join a board, just be licensed by the state to practice RE). Just meet a random person and say "Oh you want to sell a house, call Mike!" I will send over a 25% referral fee on every transaction for those 9 words if they buy or sell. (Average house sale in my area means you get a fee of $900 for each one they buy or sell for those 9 words).
Sadly if you didn't pay the couple hundred on licensing, I can't give you a pack of gum. I appreciate referrals so much. My business is built on it. I have requirements to give out money though as a licensee. It may be the state that gets me. It may be the IRS. Either way I have to follow the rules and I do because one $900 referral fee isn't worth risking my business. I have pulled referral fees from Florida, NC, TN, MI, AZ from people I recommended anywhere from $800 to $7800 dollars. Just for recommending the right person. If they didn't have a license in that state I couldn't recommend. I have paid out referral fees anywhere from $500 to $3500 locally for an "Introduction" to a buyer or seller. Key being.... "When it sells".
Hope it helps and check out your local requirements, good luck!!
1 Reply
Frank Hinck
Rental Property Investor · Minneapolis, MN · Member since 2020 · 540 posts · 285 votes
6y
@Nick Webb
You didn’t’ say anywhere that Realtors were involved in that referral fee transaction, I’m not a licensed realtor so I take back that comment.
As I hear (again not a realtor), as a realtor you have a fiduciary duty to the seller so there are some major disclosure documents to have the seller sign before doing a wholesale.
Non licensed wholesalers do referral / finders fees & JVs all the time though.
1 Reply
Steve Morris
Real Estate Broker · Portland, OR · Member since 2019 · 4k+ posts · 2k+ votes
6y
I don't know, you're in the gray area (believe me I'm not against paying an honest referral fee).
I think the word salad is you need a real estate license if you're arranging the sale of RE in expectation of a fee.
DISCLOSURE - AM NOT A LAWYER SO I MAKE MISTAKES AND MAY NOT BE CORRECT!
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Jerryll Noorden
Flipper/Rehabber · Wilton, CT · Member since 2015 · 4k+ posts · 4k+ votes
6y
Originally posted by @Frank Hinck:
@Nick Webb
You didn’t’ say anywhere that Realtors were involved in that referral fee transaction, I’m not a licensed realtor so I take back that comment.
As I hear (again not a realtor), as a realtor you have a fiduciary duty to the seller so there are some major disclosure documents to have the seller sign before doing a wholesale.
Non licensed wholesalers do referral / finders fees & JVs all the time though.

Yes I agree here. (Your question was very misleading omitting the fact you are talking about realtors).

Be careful. I spent 10 weeks doing these gaaadamn boring agent classes to get my license, and then after some research and a LOT of complaints from investors turned agents, they regretted getting their licenses. So I stopped!

Legal or not? Don't know... and don't let anyone here tell you whether it is or not. It is your responsibility to find out from a reputable source (And that is DEFINITELY NOT Biggerpockets where everyone is a self-proclaimed expert).

Find out from a real estate lawyer you can trust. (Even if a lawyer tells you it is OK and it is not, it is YOUR butt on the line... not the lawyer's).

2 Reply
Account Closed
Specialist · OverTheRainbow · Member since 2020 · 607 posts · 909 votes
6y
Originally posted by @Jerryll Noorden:
Originally posted by @Frank Hinck:
@Nick Webb
You didn’t’ say anywhere that Realtors were involved in that referral fee transaction, I’m not a licensed realtor so I take back that comment.
As I hear (again not a realtor), as a realtor you have a fiduciary duty to the seller so there are some major disclosure documents to have the seller sign before doing a wholesale.
Non licensed wholesalers do referral / finders fees & JVs all the time though.

Yes I agree here. (Your question was very misleading omitting the fact you are talking about realtors).

Be careful. I spent 10 weeks doing these gaaadamn boring agent classes to bet my license, and then after some research and a LOT of complaints from investors turned agents, they regretted getting their licenses.

Legal or not? Don't know... and don't let anyone here tell you whether it is or not. It is your responsibility to find out from a reputable source (And that is DEFINITELY NOT Biggerpockets where everyone is a self-proclaimed expert).

Find out from a real estate lawyer you can trust. (Even if a lawyer tells you it is OK and it is not, it is YOUR butt on the line... not the lawyer's).

Advice on Bigger Pockets is valued at the amount you paid for it. ;-)
The comment: "(Even if a lawyer tells you it is OK and it is not, it is YOUR butt on the line... not the lawyer's)."

Is exactly right.
An attorney will tell you his "legal theory" and that's a carefully worded phrase since only a "finder of fact" ( a judge or jury) can ultimately tell you the answer. That is a long, hard road to take.

2 Reply
Frank Hinck
Rental Property Investor · Minneapolis, MN · Member since 2020 · 540 posts · 285 votes
6y
@Jerryll Noorden
Stop trolling after my comments trash talking my opinions or I’m going to Report you. This is supposed to be a supportive site for all opinions.
0 Reply
Wayne Brooks
Real Estate Professional · West Palm Beach, FL · Member since 2012 · 23k+ posts · 13k+ votes
6y
Typically....it is not illegal for a non licensed person to pay a referral fee for a closed deal, but it is typically illegal to receive on as a non licensed agent.
As for a licensed agent, yes it is illegal to pay a referral fee for a closed deal to a non licensed person. Agents can only pay such fees to other agents, actually to their broker from your broker.
0 Reply
Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
6y
Originally posted by @Frank Hinck:
@Jerryll Noorden
Stop trolling after my comments trash talking my opinions or I’m going to Report you. This is supposed to be a supportive site for all opinions.
the ONLY authority in this wholesaling BS is the state your working in and their department of real estate.. run your bizzness model by them for approval or clarification.. everything else as others have suggested is just uneducated hearsay.. myself included.. LOL

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Jerryll Noorden
Flipper/Rehabber · Wilton, CT · Member since 2015 · 4k+ posts · 4k+ votes
6y
Originally posted by @Frank Hinck:
@Jerryll Noorden
Stop trolling after my comments trash talking my opinions or I’m going to Report you. This is supposed to be a supportive site for all opinions.

Dude I agreed with you.

I even voted for your response.

You have some issues bro!! Go get it looked at!
I don't give a damn who or what you are. If you give bad advise I will correct you and if you give good advise I will vote. Stop making everything about you.

As for trolling you or anyone...

I live life with her!

Dude she violates me day and night. After she is done with me she sends me to the kitchen and slave on the stove. I have no time for trolling bearded men.

3 Reply

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