If I buy a property via my own corporation am ``I`` allowed to collect a referral fee from the seller?

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Acer, I am not trying to manipulate the system. Perhaps you should try leaving out your insulting assumptions or simply do not answering.

Have you considered that I maybe the one selling the property and was presented with this proposal?

Everyone else, thank you for your help.

Your questions aren't making any sense here. Why would a seller pay YOU a referral fee for a property YOU are purchasing ? For some reason, I get the impression that you are a licensed real estate agent trying to manipulate the system to your advantage by using a corporation.

Follow up: If you don't want me to think YOU are buying it, you might try wording other than "If I buy a property via my own corporation am ``I`` allowed to collect a referral fee from the seller? "

I am sorry to see the insults from the real estate agents and REALTORS. In my experience they are not concerned about your interests.

REALTORS and real estate agents insult me on a regular basis and I insult them right back.

REALTORS and real estate agents are only concerned about their own interests and getting paid.

They are very threatened by people who represent themselves rather than use REALTORS and real estate agents. They become very resentful and insulting toward people who do not need their services.

They also do not want you to save the amount of the commission that the seller would have paid to a REALTOR or a real estate agent. That just motivates people to not use their services.

What I recommend and what I do myself when I buy a property is have my own appraiser (not the lender's or REALTOR'S appraiser) give me an appraisal of the true fair market value as a second opinion.

I use an appraiser who is a Member of The Appraisal Institute (MAI) designation, which is the highest designation in the appraisal industry.

I then give the seller two choices when I get the appraisal back

1. Either reduce the sales price to THE TRUE fair market value as determined by my appraiser (not the lender's or REALTOR'S appraiser who is usually too high) and I also deduct a further 3% from the fair market value for the 3% the seller would have paid a REALTOR if I had one representing me. (I always represent myself in a transaction, and I have an attorney write my offers and protect my interests because my attorney does a much better job than any REALTOR and he costs much less)

2. Or the seller is to agree to cancel the transaction and instruct the escrow company to return my deposit.

( I have my attorney write language into my offers that permits me to do this and makes it very expensive for the seller if he does not voluntarily agree to cancel the transaction and return my deposit)

(REALTORS and real estate agents do not like that language because it makes it easy for me to cancel a transaction if it does not appraise and the REALTORS and real estate agents are impatient about getting transactions closed and getting paid. They are not really interested in representing your interests, even though they claim that they do.)

If you reduce the price by 3% you are still saving the commission, you just are not getting the cash at closing.

That eleiminates all of the arguments about whether you are getting cash back in violation of your lender's prohibition on getting cash back at closing, and you still save the REALTOR's commission. The REALTORS hate it and feel very threatened when you save the amount of their commission. .

I noticed that the REALTORS and real estate agents were all upset about the possibility that you might be getting cash back at closing, but were rather unconcerned that you should reduce the sales price by 3% below fair market value to compensate you for representing your self and saving the seller the 3% commission that the seller would have paid to your REALTOR if you had one representing you.

I have noticed that REALTORS and real estate agents are very threatened and insulting toward people who represent themselves. I know, I am insulted by REALTORS and real estate agents on a regular basis when they discover that I do not need or want their help and I know far more about the process of buying and selling real estate than they do.

I am sorry to see some of the insults that the real estate agents and REALTORS made to you. I find that is typical of them. They are not concerned about your interests, they are only concerned about their own interests and getting paid for the small and rather insignificant amount of work that they do.

(edit regarding Godged just below me) She is one of the real estate agents who feels her excessively large commissions are threatened.

What she calls rambling and not answering the question is actually information that she does not want you or other unlicensed people to know because it threatens her ability to collect excessively large commissions for little or no work.

What she did not tell you and does not want you to know is that you can negotiate with the seller to reduce the selling price by the amount of the REALTOR'S commission that you saved the seller by representing yourself.

She and the other real estate agents want to turn this into an issue of only getting cash back, which most lenders prohibit.

She completely ignores the issue that you can get the selling price reduced by the amount of the REALTOR's commission that the seller saved on the transaction.

Turning the issue of saving the real estate agent's commission into an ethical issue has been one of the standard tactics that real estate agents have used to make it difficult for buyers and sellers to negotiate lower and more reasonable commissions.

You have every right to negotiate the sale price down to the TRUE FAIR MARKET VALUE less the 3% in commissions that you saved the seller by representing yourself.

REALTORS and real estate agents hate it when you negotiate their commissions down.

Many years ago the REALTORS even had their commissions fixed by law until those laws were held by the courts to be unlawful violations of antitrust law.

Today they are more subtle about it. The real estate agents and REALTORS make it an ethical issue and they insult you when you try to negotiate their commissions down.

Acermill was not trying to insult you. He volunteers his time here to help, and has been doing it for awhile.

No, what you are suggesting is not legal in a real estate transaction. It does not matter what side of the transaction you are on.

I am a Realtor and recently bought a home for myself.

In Texas I am allowed to collect a commission on the transaction (thru my Broker). With my company's agreement I negotiated that the seller would instead pay an equivalent amount of money toward my closing costs. This meant that I still got the same benefit but did not have to pay income taxes on the money.

If you are not a licensed real estate agent you probably can not collect a referral or a commission in your state. If you are licensed and will be collecting a commission or referral you should let every owner of stock in your corporation know what you are doing so there won't be any misunderstandings. In Texas there would not be any problem with this except you could not use any part of the referral or commission as the down payment without the written permission of the lender.

25 years ago FHA would allow Realtors to use their commission as their down payment of their personal home but they changed that rule very soon after that.

Never do anything "under the table" meaning that it is not truthfully reflected on the HUD statement. It can easily be considered bank fraud and result in prison.

Regardless of the "angle" you are working here, if neither you nor someone in your corporation is an actively licensed real estate agent then you cannot collect a fee. Practicing real estate without a license can result in both jail time and penalties.

If the seller is paying a Realtor to market the property, then you're not able to collect a "referral" fee unless you're a real estate professional.

If the seller is selling it him/herself, and your corporation has a loan on the property with you as guarantor, I'd say that you have to be very careful - a referral may be considered a violation of RESPA.

I'd check with your lender and or CPA on this.

Are you a licensed Real Estate agent and yes it does sound very much like a scam. IF you do not want someone to assume you are the buyer then why state

"If I buy a property "?

Mike rambles on and on and never addressed the question.

Acermill is a great asset to Renting and Real Estate, he donates a good deal of his time to assisting people with questions, and does a darn good job.

As the others said, you are not permitted to collect a referral fee unless you are a licensed real estate agent. If I am understanding your question correctly, you are purchasing through a corporate entity, and that entity cannot hold a RE license.

Referral Fees
Fees paid in exchange for delivering a qualified sales lead or purchase inquiry. For example, an affiliate drives traffic to other companies' sites, typically in exchange for a percentage of sales or a flat referral fee.

Here is what is wrong with your scenerio:

1st...you can't collect a referral fee as a Realtor from a transaction you are PERSONALLY involved in. You PAY the referral fee if you are personally involved in. That is only from Realtor to Realtor and must come out of the base commission, it cannot be added to the commission...that is against RESPA.

So no, you cannot charge the sellers a referral fee b/c they are not licensed Realtors....that is an illlegal fee.

2nd..if you are referring to commission and not a referral fee....you are screwing yourself by financing your own commission plus the cost of a SECOND appraisal.

Realtors have to disclose on the sales contract if they are a licensed Realtor...however, that is NOT the same as CONTRACTUALLY representing themselves, even if they don't have another Realtor representing them.

If a Realtor is the buyer AND representing themselves formally on a sales contract, the transaction is automatically considered non-arms-length and most all investors will require a second appraisal..plus the commission which comes off the sellers end, which is in the sales price...so WHY would you finance your own commission?

It makes no common sense and it is a bad financial decision.

PS: I gave Acermill thumbs up b/c I agree with him totally on this issue...you are trying to find a way to milk the system for money, but luckily there are guidlines in place to prevent Realtors from doing so. Your license isn't worth it.

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