Paying for Introductions - Beware of Licensing Laws

By
Commercial Real Estate Agent with REATA Commercial Realty, Inc. Texas 537349

Today I was looking on a popular business networking site when I saw the following question posted:

“I will pay $35 for an appointment with a CEO, small biz owner, or investor interested in real estate purchases and investments.

We have a client willing to pay $35 per appointment with ANY large corporation in Arizona that is looking to buy land. If your contact ends up making a deal with our client, you will receive 35% of our client's commission or at least $2,000 as a success fee (along with that initial $35 for the contact information and introduction you provided).

Let me know if you can assist!”

Paying for introductions or appointments may be fine, but paying based on closed business may get you in trouble.  Here how I responded to the questioner. 

Be careful that you don't violate your state's real estate licensing laws.  You can pay someone to set an appointment.  That has nothing to do with the real estate transaction.  But if you pay the referring party based on closed business, now they are receiving compensation for a real estate transaction and that probably requires a license in most states. 

I am a licensed broker in Texas specializing on providing corporate real estate services.  I contacted the real estate commission to see if I could pay a portion of my commission to my client's favorite charity.  I was told in no uncertain terms that that would violate the law.  Rebates to principals in the transaction are legal, but not to third parties.  So I can give my corporate client a portion of my fee, but I can't give it to the president personally, to his favorite charity, or to the person that referred me to him.

So you should check with the real estate commission in the states in which you do business to see what their rules are and you may need to find a way to tie the extra compensation to something other than the closing of the real estate transaction.

 

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_________________________________________________________________________

Bob Gibbons

REATA Commercial Realty, Inc. | 1211 E. 15th Street, Plano, TX  75074

972-468-1946 p | 866-439-8015 f | 972-984-8580 m

bob@texastenantrep.com | www.TexasTenantRep.com

 

 

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Rainer
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Sean Carroll
The Get Off Your A$$ Academy - Manhattan, NY
Real Estate Speaker and "Expert" Coach

very intriguing. I am often surprised at home many people think they can receive referral fees without a license.

Jul 17, 2008 07:47 AM #1
Anonymous
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Nov 29, 2011 10:00 PM #2
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Rainmaker
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Bob Gibbons

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