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Non-Licensed Folk Trying To Sell Luxury Homes - HUH???

By
Real Estate Agent with Prudential California Realty!

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!

Lane Bailey
Century 21 Results Realty - Suwanee, GA
Realtor & Car Guy

And here in GA it is illegal to do a "net listing" where the agent keeps the proceeds above a certain price (ie, keeping all of the price above $5m).  I don't know about CA, but it is supposed to be illegal in a bunch of states...

Sep 07, 2009 01:13 PM
Daniel J. Hunter
REALTORĀ® - New Port Richey, FL

this is a  no brainer

Report them, absolutely

 

this is not some gray area they accidently wandered into.  It is an intentional criminal act

Sep 07, 2009 02:30 PM
Damon Gettier
Damon Gettier & Associates, REALTORS- Roanoke Va Short Sale Expert - Roanoke, VA
Broker/Owner ABRM, GRI, CDPE

I would report them but that is me.  I believe that we are responsible for policing our industry.

Sep 07, 2009 03:15 PM
Karen Monsour
Coldwell Banker Fort Lauderdale Beach - Fort Lauderdale, FL
REALTOR, SSRS - Sells FL Waterfront, Short Sale Expert!

Are you a broker?  If not, I would explain the situation to your broker and get his/her advise.  After all, bottom line is, they are doing illegal activities and personally I understand your issue is do I do the right thing or do I ignore it.

Think about this, if you know it and you don't report it, can you be held responsible as well?  What if another agent reports them and they say to the state...we talked to Suzanne about what we were doing...even if you told them it was illegal and you didn't report this type of activity to the state...are you being un-ethical?

Report them, save face, save your license and your future...Just my $0.02

P.S.  You just put this in writing on a blog...think about who reads here...

Sep 07, 2009 03:55 PM
Roland Woodworth
Blue Cord Realty - Clarksville, TN
Blue Cord Realty

Oh my..  It is amazing at what some people will do these days.. Maybe someone should report them to the CREC

Sep 07, 2009 04:05 PM
Virginia Hepp - Mesquite NV REALTOR
Desert Gold Realty - Mesquite NV Homes For Sale - Mesquite, NV
Mesquite NV Homes and Neighborhoods - Search MLS

Report it to your board - they should investigate it and file a complaint - we want to protect folks against the

'fraud, fakes, flakes and all other sorts of F words'  - they really are F words, aren't they?

Sep 07, 2009 05:14 PM
Daniel J. Hunter
REALTORĀ® - New Port Richey, FL

after reading the replies, I think i must agree with those who said report it to your broker, if you are not the broker.  That is who it is all about in the end.  no matter what I do, it reflects on my broker, so it is his/her decision to make.  I, as an agent, can only bring it to his attention IMHO

Sep 07, 2009 08:02 PM
Allison Stewart
St.Cloud Homes - Saint Cloud, FL
St. Cloud Fl Realtor, Osceola County Real Estate 407-616-9904

It is an illegal act period. 

Sep 07, 2009 09:30 PM
Irene Tron
Valparaiso, IN

Absolutely report them!

Sep 07, 2009 11:55 PM
Wayne Palmer
WNC Dreams Realty - Sylva, NC
Eddie Palmer

Let's see.  If you see a bank robbery taking place, right down the tag number of the vehicle, can describe the robbers, know where they are located, what their website is,... hmmm.   Does this not make you a conspirator, perhaps withholding evidence, become a party to the crime?  There are times when we have no choice about the path to take.  This is one of those.  They know enough to circumvent the legal way to do it, could have gotten a real estate license, become one of us, and make a fortune from one sale.  Rather, it appears they have chosen not to do so.  There are a lot of geniuses sitting in jail!  Add 2...

 

Eddie Palmer, Century 21 Mountain Lifestyles, www.eddiepalmerc21.com

Sep 08, 2009 02:31 AM
Christianne O'Malley
Dickson Realty - Reno, NV
Exceptional Service - Delivering Results in Reno!

I would not hesitate to report them. They are diluting your ability to help buyers and sellers by trying to do something illegal and circumvent all the laws and protections afforded buyers and sellers in this market. You pay state dues, license renewals, fees for continuing education, National Dues, Local Board Dues...and you're going to turn the other cheek when someone approaches you with illegal activity?

I would have gotten every little bit of information I could on them and reported it all - just like I would for a fraudulent Home Loan Modificdation consultant or anyone else potentially disparaging my industry. If we don't keep our own back yard clean, we can't complain when it's full of crap.

Sep 08, 2009 03:52 AM
Tim Krueger
Morovish Properties - Costa Mesa, CA

It sounds like they have an option contract and are trying to sell the option to purchase the home.  It is not illegal to have an option consideration on a home and then try to sell your option.  

Sep 08, 2009 04:01 AM
Mark Hall
Realty One Group Cascadia - Vancouver, WA
Homes for Sale Vancouver Washington

Are they pretending to be realtors when they are not pretending to be doctors or lawyers? This is the craziest thing that I have ever seen. Report them!

Sep 08, 2009 04:34 AM
Maureen Megowan
Remax Estate Properties - - Palos Verdes Estates, CA
Palos Verdes Real Estate Blog

I would report them to the DRE, but for the life o fme I can not figure out why a seller would ever agree to a deal like this

Sep 08, 2009 09:22 AM
Bob Hirsch
The AVD Group - Bellflower, CA

These people are not naive--they are scam artists and criminals.  I'll add my name to the list--they should be reported to DRE.

Sep 08, 2009 02:40 PM
Janice MacMillan
ERA Joyner Realty - Valdosta, GA
Associate Broker

It is amazing to me what some people will do, educating oneself in said ventures might behoove them somewhat. The laws are pretty clear......

Sep 09, 2009 12:14 PM
Lisa Matykiewicz
United Brokers Group - Gilbert, AZ

Well it sounds like you will do the right thing and report them.  It is illegal and could put that unknowing seller at risk.

Sep 09, 2009 01:14 PM
Anonymous
Andy Boubel
We get our fair share of idiots here in Arizona too. Please do us all a favor and report them! Andy Boubel 480-215-3961 Vista View Realty Group LLC
Sep 15, 2011 09:28 AM
#97
Anonymous
George

Is giving Commissions to Unlicensed Persons permitted in California?

Builders like Pardee Homes are giving very high commissions to Unlicensed persons - $5,000 for referring a new customer. 

http://www.pardeehomes.com/application//lib/pdf/Referral_CA.pdf

Hence Unlicensed persons are taking property brochures and distributing in work places and offices and marketing the property and filling out the referral sheets for the $5,000 referral commission.

Does the Real Estate law permits marketing of properties by Unlicensed Persons and permits Builders for giving Referral Commissions to Not Licensed persons?

Apr 01, 2012 02:12 PM
#98
Anonymous
Barrington luxury homes

It is illegal and could put that unknowing seller at risk.his is the craziest thing that I have ever seen. Report them!

May 23, 2012 05:06 PM
#99