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

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!

Posted by Suzanne Grace on 09/07/2009 04:22 AM

Comments (96)

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96 Comments on Non-Licensed Folk Trying To Sell Luxury Homes - HUH???

SEP

Wow. I would also not know what to do. I think I would talk with them and tell them if they quit I wouldn't blow the whistle.

I would know what to do and what I would do in a nanosecond.

REPORT THEM.

Anything less is enabling them.

What Lenn said. It's a crime.

They will soon hurt someone if they approach their new venture with persistence.

At the least I would send an email with all the facts to the DRE. At least someone would have to open a file, I would hope, on this couple. If we expect to keep our business clean, then we have to help when its needed.

Suzanne,

As i read your post I wonder WHAT seller would fall for something so ridiculous? Especially in that price range, I can't imagine that the seller wouldn't be looking for a TOP agent to market their property. Thanks for the post.

Mike

Great...so you know every genious with a terrible idea eventually makes their way over to the Charlotte market after they try and scam CA, FL, AZ & TX...I will keep my eye out...Happy Labor Day!

mmmm I smell a rat..... how difficult is it to get a real estate license? If these folks are serious, no matter how inexperienced they are they should know that having a license is a minimum entry requirement to do business. No doubt you should protect yourself (and the industry) by at least reporting them to your local real estate board - you never know your local re board may already be aggregating reports on them.

Suzanne, I'm not sure whether you should contact the DA's office or the seller, but here is information about Filing a Complaint with the DRE:

Investigations are made by the Department of Real Estate's Enforcement Section on the basis of written complaints received from the public. To initiate an investigation, the DRE must determine two things:

1. That the individuals or companies involved are under the DRE's jurisdiction. The Department has jurisdiction over real estate licensees, subdividers and unlicensed persons who have performed acts which require a real estate license.

2. That the complaint relates to possible violations of the Real Estate Law or Subdivided Lands Law.

If you do decide to file a complaint with the DRE, be sure to include a link to their "real estate website" in addition to the details of your telephone conversation with them, which alone may or may not be sufficient evidence, I don't know. All you can do is report what you know and leave the rest up to DRE, DA's office, seller or any combination of the three. You can't control the outcome, but you can file the complaint.

And I would contact the seller directly and list the house properly. There is NO ethical line to cross there!

Suzanne,

You have to report them. You have to because they are breaking the law.

Sounds like you had a week! You will do the right thing!

Suzanne,

I'm not sure where to report them, but report them I would.

Rich

Report them. It seems that every time I hear an "aw shucks" about reporting someone, it is the precursor to more and more frequent infgractions and more victims. The bugs crawl out from under the rocks in this economy. Do something.

Suzanne, definitely report them - and go get that listing! It is more than just all about them, it is all about the public's perception of us as professionals. If we let people like that go around promoting themselves as the answer to a seller's needs, then we are helping lower the perception of our value to the public.

Sharon

Well if they had taken the course they would know this, right? I would definately report them, wrong and illegal and bold too. When you said, "I bet", I was not surprised at all. Some agents would do anything to make a buck. Shame on them.

Somewhere down the road the facts will get blurred and these clowns will be wrongly identified as Realtors and then we all get the blame!

Suzanne, Sounds like the overwhelming support here is to report them and I would agree. However, I'll bet David hit the nail on the head! Keep us informed as to what happens!

I think you should report them too. The rules are there for a reason. Why have they not been reported already? Why are other agents willing to help? We often want to take the easy road and have nothing to do with it but by not reporting you are enabling. There would be less fo this type of crime if more people would speak up and make the relevant authorities know what is happening.

Good Luck!

Net commissions are illegal in Texas too, for Realtors. This couple sounds as if they have discovered yet another get rich scheme or program on the internet that saves them from having the training, knowledge or ethics required to list and sell real estate. The public often views our profession with so little respect that there will always be people trying to figure out a way to engage in or profession and make an easy bundle without a Realtor!

Suaanne, I have to agree with the group here. These people need to be reported and put out of business.

I also agree, they need to be stopped before some poor soul falls into the trap. Unreal, I am amaxed at what goes on that we find out about, let alone what we dont'!

That scenario is a first for me to her in 20 years of real estate. I guess there really is 8 million sotries in The Naked City

Hmmm... very interesting. I'm always mildly surprised at the (general) reluctance among realtors to report illegal, unethical behavior by others in their industry. I've never quite been able to get a handle on that.... are there negative repercussions that go back to the reporting realtor? The other thing that struck me when reading your post is why did they pick you? Did they give any indication in their conversation of why they called you ... something from your website? or listings in the same neighborhood? or a referral? or what?

Several real estate investment "gurus" teach the techinque of sigining an option agreement to purchase the home. Buyer signs an option to buy the home for $5,000,000 within the next 12 months, then the buyer does whatever marketing they can to sell their option for a higher amount and their profit would be the spread above the $5M. One of the gurus teaches to hold a big public auction and to bring in all sorts of luxury furniture and other items to sell along with the home.

I know the law here in Florida requires an option to have 'substantial consideration' if a buyer wants to do this. Otherwise they will be considered brokering without a license.

Interesting situation. Does the seller know it is illegal to pay some else than a real estate agent? Probably not.

Suzanne,

I've had that conversation many times before.

And, do you know who's approaching me?

Actually, it's licensed agents..... brand new, without any clients.

They already know that something is wrong about it, but, they seem to think I will have a clever solution (I teach real estate law).

Obviously, the answer is simple: it's illegal.

Brian

<GRIN>
Ok, I know this is just ridiculous - have these people considered the fact that if this was legal, we would all drive bentleys and drink martinis all day long...

Sort of like those criminals on tv...

anyway - reporting is the only option.

Suzanne,

I would report them and contact the sellers. I agree with the others that it people like this couple that gives licensed professionals a bad rap.

Paul

It is amazing that people have the audacity to think this is clever. And that home owners would get involved with someone like this is pretty scary too.

Happy Labor Day AC,, They always show the good side on Real Estate shows on TV,, Let start a reality serious about the bad things that happen.lol

I would also report them as well.

Take Care.

Wow! I love this post. It's a fun little anecdote that puts important information out for others.

This is news to me! Thanks for sharing your story so we can all beware!

Sounds like my week...these are the reasons I become very disheartened with our industry and our ability to get rid of the bad name people have helped us acquire.

Definitely report them then inform the sellers and obtain the listing yourself.

People like them are the ones that give realtors a bad name. We have a duty to protect our profession from con-artists and scams.

Where do these people come from? I would report them to your state licensing agency. What they are doing is illegal and they need to be stopped.

Wow! I think I would say something to someone. other wise if they hurt someone I would feel partly responsible.

P.S.

I just put up a new web site and I am looking for feed back... if anyone has a minute plese visit www.carolinaland.com and give me some feed back

thanks

Ken Williams

CarolinaLand.Com

Our profession already has a hard reputation to defend, so I believe we have to self-police. I would report them and go to the Seller directly to try to get the listing.

You need to report them. Here in Florida it is a felony to sell real estate without a license with few exemptions such as if they are an attorney, a principle of course and working for the government in that capacity. Katerina

If you run across anyone doing something illegal, then you should report it. Cut and dry, no ifs, ands, or buts about it. Report it.

Suzanne, I'd say I'd have to agree with the many other posts about reporting these people. They probably already know the law...I doubt you were the first licensed agent to tell them what they are doing is illegal. But, even if you were, it's probably best to still go ahead and "enlighten" the higher powers about the situation. You'll be doing the Seller and the profession a huge service! Great topic. If you don't mind, I'll be sharing your story on my radio show today as a "Seller beware!" commentary.

This is the type of stuff that gives REALTORS the bad taste that many people have about us AND this isn't even beeing done by a REALTOR! These people need to be reported.

Just think if they had their real estate license what kind of agents they would be?

Suzanne...We here about this kind of Business proposal all the time, I have even had occasion to work with a developers sales representative who does have the right to sell properties on site for his employer without a license...the problem is with these Developers you get people trying to move-up or re-sales that are not owned by the developer ...but these on-site guys still think they can do those sales...Wrong...wrong ...wrong.

now there's a novel idea--probably never occured to them that you have spent countless dollars and hours on education to obtain and maintain a document that enables you to do that LEGALLY. Probably they saw how easy it is to sell expensive real estate (all those brokers getting rich, making "money for nothing") and thought they'd try their hand at it. And skip that critical step of actually learning how to do it and what it takes to do it legally. definitely report them!

Report them. We are in a huge mess right now in our market and a lot of the reason is because of people working fraudulent angles. We don't need more of these types - we need fewer!

Suzanne: If what you say is true: “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” ….then REPORT THEM! If you don’t’, then you become part of the problem rather than a solution.

To do nothing, perpetuates the problem

Hi Suzanne...I second Lenn!

They may sound nice, they may sound innocent, they may sound as though they are trying to help the "seller" but...they are breaking the law.

Kate

P.S. Interestingly enough, the graphic below is "nervosa". People like that should make us all nervosa.

Just when you think you have heard it all.

Pretty gutsy, and stupid, I'd say. I vote for reporting them...pronto.

Jeff

Please report. In this econonmy, people of all income levels are facing financial difficulites and they fall privy to these types of individuals with hopes that they can overcome their situation. What if the seller was related to you? Wouldn't you want someone to blow the whistle? We have to keep our industry clean. Good luck! And sorry the burden to report falls on you.

You said they were young... apparently motivated and ambitious. But obviouly going about it the wrong way. You should report them so they can be re-directed now, before they get into REAL trouble.

What's there to think about? What they are doing is CLEARLY illegal and is working against everything you have worked FOR the legal way. REPORT THEM!!

The only way these folks can do what they are trying to do without a license, is to buy the property themselves and then re sell it. or just contract to buy the house and assign the contract.

My board tries to discourage contract flipping by requiring the owners signature on the listing agreement, but the one company I know locally that does this, dosent list them with a REALTOR® they maintain their own website and send out a blast email whenever they have something new to sell.

I think that if you can help these folks do what they want to do and stay within the law, and to be a little more realistic about their profit, you could end up with several new listings and perhaps a sale or two

Seems crazy to me. What are the sellers thinking of?? Why wouldn't they was "the best" agent representation possible.

Patricia Aulson/portsmouth nh homes

I simply can't image how this couple would think this type of arrangement would be legal. They obviously didn't even try to do due diligence.

I wouldn't waste my time reporting them unless something can be done about it. When in fact the one doing the reporting maybe the one losing the most. Attorney fees, your time, and you may end in your own court battling a defamation suit.

According to DRE:

We cannot act as a court of law, so we cannot order that monies be refunded, contracts be canceled, damages be awarded, etc. If you have this type of problem, you should consult an attorney.

We cannot give legal advice or act as your attorney.

It all sounds goods but would the end result justify the means. I would have told them it is illegal and I do not intend to get involved. It sounds like that got caught up in some hyped up scheme someone was selling and really didn't know that they were doing something illegal. Getting a RE license is very easy to obtain and I would have guided them into that direction.

Sometimes you just have to pick your battles wisely.

I love that: Mercury is certainly retrograde! In Oregon it is illegal to pratice real estate without a license. And that's when an unlicesed third party tries to put buyer and seller together. It's such a gray area when it comes to IDX sites, home stagers who post listings on Active Rain replete with sales price, sq. ft., etc. My pet peeves are home stagers who want to play Realtor(r) and BLOG and post listings -- they are NOT IDX sites, they are NOT Realtor(s), they ARE blogging about substantive discourse (price, sq. ft., etc.)

Anyway, back to your post . . . you should ABSOLUTELY report them. Report the people that approached you, and let the chips fall where they may. Report what you know. Also, call up your state licensing board (not local) and tell them. My state's licensing board does investigate people practicing real estate without a license.

No debate...it is illegal to sell real estate without a license. There really are good reasons for that and they have to do with consumer protection not realtor protection. Report them, now, today.

I didn't get a chance to read all of these comments, but isn't there a chance that these people got the idea from one of those late-night infomercials? Nutty as heck and completely illegal. But so much of the stuff on those infomercials is nutty. I would report it to your local board.

Report them.

Did you get their names? Capture their phone number? Find their website? Learn the address of the luxury property they wanted to sell for the owner? If you have any of this data, I think it's your duty to report them.

I would report them in a heartbeat. This is against the law, period.

I am amazed at the scams that people have the time to sit around and invent. Perhaps if people like this spent more time doing something legal and ethical the world would be a better place. Time to report a crime! Go get em!

Amazing story. I think action must be taken to protect the seller and anyone else that might be taken advantage of by this couple. From your well written and researched article, it sounds like you already have decided to do the right thing.

Suzanne

I'm curious, what homeowners in their right minds would hire these snake oil salesman to sell their homes?

REPORT THEM to the local association, state association, and national association. While you're at it let the local D.A, State Atorney an U.S. Attorney's offices know about them. I'm sure all these groups would love to have them over for a chat.

Wow! I am not sure if any of you know the movie, "I Love You, Man" but it is about a guy who is getting married and he doesnt have a best friend to be the best man. So, he goes looking for a friend - and finds the most amazing guy ever.

Can I just say, "I Love You, Wo/Man"! What an amazing response to this topic. I am proud to be part of such an elite group of Realtors, proud to call myself a Realtor and more importantly - I agree with all of you!

Yes, I even agree with the comment about reporting may bring about problems for me...........I know, that's been my biggest hesitation.

We Realtors can be a supersticious bunch; will I reap bad Karma if I don't? Will I reap bad Karma if I do? That's a dilemma!

However, it is truly an easy decision; do I allow - yes, it does fall on me - someone to desicrate ALL that we work so hard for?

Do I allow this couple to make a mockery of my profession?

HECK NO!

So, family of Realtors - I will make the call, submit the site and supporting documentation - and YES - a HUGE RESOUNDING YES - I will also contact the seller.

Those kids don't know who they are messing with - I am a REALTOR! I am proud and strong and will not allow my career choice to be made a mockery of.

I did advise them to get their own license; after many years of training, MAYBE they will be ready to sell a home.

But dont belittle what we've worked so hard to achieve...................

Oh, one other comment - please please please read my article on the fraudulent agent - that is also something I would love love to hear comments on........

Suzanne, In Florida it's a 3rd degree felony to sell real estate without a license. A lot of this going around. However, talking about it is not a crime. Might not hurt to give the DA a heads up though.

Plain and simple. Illegal to sell RE without a license. Report their LLC.

Suzanne - you will be doing the right thing. These people are a threat to sellers and unknowing buyers.

Great, you have already made the decision to report them. Congrats. Make sure to keep records of all documentation, and make transcripts of any verbal communication. I don't know how long the process takes in CA, here in OH it's about a year till the case actually comes to a hearing at the DRE.

Yes they are definitely a threat! Unfortunately for them, I do have the home owners name, contact info, etc as well as a link to the website, a copy of their agreement as well as a few emails from them outlining their program with the seller as well as with agents. So, the DAs office will have plenty to review and discuss with them, that's for sure.

I did meet with them in person and I do not believe they truly know what they are doing - they are very innocent in that regard, and I bet they were watching some late night info-mercial telling them how they, too, can get rich quick in the world of real estate!

However, I did warn them - in writing - and told them it would be best if they cease and desist as all it will take is one person to send their link to the DAs office and they are in a world of hurt! They havent however, as I do not think they understand the seriousness of it.

Tomorrow is a brand-new day - and if the site is still up - I am all over it like white on rice! Wish me luck!

Yep! It's illegal and the only thing to do is tell them and report them. Thanks for sharing!

Interesting that people think this actually works and call around advertising it.

Hi Suzanne~ Please, be sure to come back and let us know the outcome...

Seems you should report them -- and while you would not go along with this -- there will be someone else who will -- and do we really want this to be happening-- it is not legal--

report them --

our 2 cents.

You should ABSOLUTELY report them. This market seems to be bringing out all the fraudulent scams. I've experienced one myself recently. It's amazing to me that these people seem to slide by.

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...

this is a no brainer

Report them, absolutely

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

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

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...

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

SEP

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?

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

It is an illegal act period.

Absolutely report them!

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

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.

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.

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!

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

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

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

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

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