Okay, I admit it - after the week I have had, from the bizarre to the just oh my gosh, get me out of here, I am feeling a tad worn.........this business used to be so easy!
I got a phone call - yes, another phone call - from what I thought was a principal! Whooohoooo - love those calls - and better yet, the seller would like to sell for approximately $5,000,000! WOW! It's gonna be a great week!
During the course of the conversation, however, my bubble certainly deflated..........this wasnt a principal at all - this was some young couple trying to break into the luxury home market - and they need my help.
But wait - are you licensed I ask? Well, no..........
And that's where it started to go downhill.
Turns out they are approaching home owners and offering to sell their homes for a certain price and if they obtain said price - they receive a commission - if they get above said price, they get the difference. If the owner in this case receives 6,200,000 for her home, this couple receives 1,200,000 in commissions. And if I help them bring in a buyer, I get 35% of their commission!
Sounds great - but it aint legal!
I mean seriously, do these folks think they were the first ever to think of this? Nope, I am certain many have come up with this one before - and dealt with the $50,000 fine, too! (Because they are an LLC, they have a 50k fine versus an individual who faces up to a 10k fine - both however, can also face up to 6 months in county jail!).
As I told them, there is a very good reason for a seller to hire a Realtor; not just anyone can sell a home and having done it once or twice does not an expert make!
Do I have an obligation to notify the DA's office? The seller? This is my own personal gray area and I am not sure what I will, wont, can or cannot do. I do not want to hurt anyone but I personally am tired of having to deal with fraud, fakes, flakes and all other sorts of F words I can come up with. I am tired of flaky agents reflecting negatively on the rest of us as well.
I did explain a little to this couple that with disclosures - to which they are not privy - they not only cover the sellers' interests, but their own. They werent sure what I meant - how scary is that?
They did tell me that there are a ton of agents interested in helping them - I bet! However, the agents cannot list the property in the MLS! The agents can't take a listing agreement on the home, either. So, what would an agent be able to do for these folks? Not much!
What I told them was simple:
It is ILLEGAL to sell real estate without a license in the state of CA. The DRE states - CODE 10130 - It is unlawful for any person to engage in the business, act in the capacity of, advertise, or assume to act as a real estate broker or a real estate salesman within this state without first obtaining a real estate license from the DRE. If you are caught, you will be fined and possibly jailed.
The code is further broken down: (2) sells or offers to sell, buys or offers to buy, solicits prospective sellers or purchasers of, solicit or obtains listings of, or negotiates the purchase, sale or exchange of real property or a business opportunity. The same laws apply for leasing as well. It also states (e) Sells or offers to sell, buys or offers to buy, or exchanges or offers to exchange a real property sales contract or a promissory note secured directly or collaterally by a lien on real property or on a business opportunity, and performs services for the holders thereof.
The website they designed for this home? Right now, the websites, etc, are illegal; you cannot post them - you cannot advertise on behalf of the seller without your real estate license number on all ads, websites, emails, etc.
The legal homeowner is the only one who can sell by owner and if they hire a representative is must either be an attorney or a licensed realtor. Code 10137 states: It is unlawful for any licensed real estate broker to employ or compensate, directly or indirectly, any person for performing any of the acts within the scope of the above described acts, who is not a real estate licensee; no real estate salesman shall be employed by or accept compensation from any person other than the broker under whom he is at the time licensed. It is unlawful for any licensed real estate salesman to pay any compensation for performing any of the acts within the scope as described above Code 1017.1 Provided every partner through who the partnership so acts is a licensed real estate broker............... Code 10139: Any person acting as a real estate sales person without a license or who advertises using words indicating he or she is licensed without being so licensed shall be guilty of a public offense punishable by a fine not to exceed $10,000 or imprisonment in the county jail not to exceed 6 months; if a corporation - such as your LLC, it is a fine of $50,000.
I didnt bother to go into the details such as when an escrow company gets involved - the escrow company cannot pay a commission to a non-licensed individual; yes, the seller can pay them or even instruct escrow to do so, and label it something else I am sure. But, legally, this appears to be a gray area.
I dont know what they plan to do, if anything; like I said, I dont know what I will do - if anything. I would love your comments and advice - as sometimes it is hard to see the forest for the trees.
I do know that I will NOT be assisting them in anyway - not unless the seller approaches me directly; as I explained above and to them, I cannot give them any sort of compensation if this happens - unless they have a license!
Well, Mercury is definitely Retrograde..........here's to another adventurous week in real estate!
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