Posted by Wayne-NC on February 25, 2007 at 09:43:57:
“We’ve probably gotten further into this than anyone was interested” Well, here in NC you have to have a license to sell anothers RE especially when the compensation shows up on the HUD statement. If it is some sort of private agreement/transaction outside of the HUD, I do not see a problem with that and as you point out, who would know. Anyway, I ran into a situation recently where I lent money against a property (as a mortgage) received interest income on that mortgage but I wanted to sell the house as well for compensation. So, the seller and I agreed to put me on the deed for a % interest as tenants in common. Therefore upon sale I would receive my lien money back plus “commission” if you will. This solved the ownership problem. One can sell their own property w/o a realtor, so now as part owner of the property, I and am free to show and sell.
I have an opportunity to buy a house. Seller has not listed with a realtor. The seller will finance the purchase for 18 mos., all monthly payments will apply to purchase (no interest), and I’ll pay balance at the end of the 18 mos. Can I also ask for and legally get a 6% commission for finding a buyer (me) to be paid at closing without being a realtor? I will give seller a down payment big enough to cover the 6% plus his closing costs. The down payment would also apply to the purchase price. Seller would have paid that 6% if he had listed with a realtor vs me buying. Thank you for your help!
Re: Can you get a commission? - Posted by dealmaker
Posted by dealmaker on February 11, 2007 at 14:26:24:
Yes, technically you can. In the situation you’re describing you would be incredibly stupid to do so IMO. Let’s say the house is $100K, you pay $10K down, he pays you $6K commission, you now owe TAXES and Social Security 15.3% on the $6K, figure about 40% total.
OTOH ask for a 6% DISCOUNT and the price drops to $94K for BOTH OF YOU.
Posted by dealmaker on February 12, 2007 at 21:56:21:
Sorry to disagree John but I’m not familiar with any state (and I don’t know all of them), that FORBIDS a non-licensed person from CHARGING a commission. Although in every state that I’m familiar with a non-licensed individual will not be able to SUCCESSFULLY bring suit to COLLECT a RE commission.
Thanks for the feedback. The 6% “commission” would be going to an LLC comprised of me and the investor splitt 50/50. So it would be a partial return for him on his money, and some cash flow for me to stay alive until the house is sold some 18 months later. At least I know its doable now, even though we’ll call it something other than a commission. Thanks again!
Posted by dealmaker on February 14, 2007 at 13:12:07:
I haven’t checked our law in TX lately, but I’ve never seen a state that said someone CAN’T charge a RE commission, what the laws I am familiar with say that an unlicensed person CANNOT SUCCESSFULLY bring suit to collect.
IOW, if I want to sell a house that I own that’s 200 miles away and I don’t want to drive back and forth showing it, but I have a friend/brother/sister or whoever that lives close by and I want to have them showing and doing everything as if it were a FSBO, and I WANT to pay them, I CAN.
However, regardless of any agreement we may have, if I decide to still them I can and there’s nothing they can do about it (in the legal system). I know that what you are saying is one of those things that “everyone knows”, but I’d bet dollars to doughnuts that the law in NJ is similar. I can’t see any legislature (even a crooked one like TX has) passing a law saying it’s ILLEGAL to charge a commission to perform a lawful commercial function.
Posted by Bob Smith on March 12, 2007 at 09:56:58:
In Florida, it is not illegal to offer to pay a commission to an unlicensed person, it is illegal for said person to accept it.
In any case, what you describe is a friendly commission. Where people get in trouble is receiving commissions from unrelated third parties, who are far more likely to report you to the authorities than friends and family.
Posted by Natalie-VA on February 14, 2007 at 13:36:15:
Dealmaker,
I’ve got to respectfully disagree with you on this one, at least in Virginia.
A RE Agent is someone who:
“for compensation or valuable consideration (i) sells or offers for sale, buys or offers to buy, or negotiates the purchase or sale or exchange of real estate, including units or interest in condominiums, cooperative interest as defined in § 55-426, or time-shares in a time-share program even though they may be deemed to be securities, or (ii) leases or offers to lease, or rents or offers for rent, any real estate or the improvements thereon for others.”
Furthermore:
“Any person engaging in unlicensed activity shall be subject to further proceedings before the Board and the Board may impose a civil penalty not to exceed $1,000 for any real estate transaction or the compensation received from any such real estate transaction, whichever is greater.”
The parts in quotes are taken from the code of Virginia. My interpretation is that it illegal to engage in those activities.
Interesting, but jurisdiction - Posted by dealmaker
Posted by dealmaker on February 14, 2007 at 13:51:37:
That’s an interesting point Natalie. I’m guessing that the VA RE Board is NOT a part of Commonwealth of VA government but is an organization that REGULATES those that come under its purview.
As such they could impose that fine on an inspector, appraiser, mortgage broker etc. I don’t see how they would ever have any authority over a private citizen.
Besides, how would they ever find out if I paid my friend/brother etc?
BTW, I checked this out with my attorney in TX and one that was handling 2 sales for me in CA about 5 years ago and both said it was OK, private sale, private business.
We’ve probably gotten further into this than anyone was interested, but I’ve done it in the past. Since I never buy anything more than 30 minutes from where I live I doubt I’ll ever do it again, but I “never say never”.