Austin TX Real Estate - Hill Country Austin Lakeway Homes for Sale: Unlicensed and Wanting Referral Fee

Unlicensed and Wanting Referral Fee

I got a call yesterday from a gentleman saying he saw my listing and wanted to put a contract on it. I'm saying, Great! Do you have an approval letter, or are you paying cash?  He responds that it'll be cash.  Great!  Can I get a letter from your bank showing proof of funds.  He says that's not a problem.

He tells me he's in Phoenix right now, but will be back in Dallas in 10 days at which time he then wants to look at the house before moving forward.  I explain to him that there has been a lot of activity on the house and I can't take it off the market to wait 10 days for him to come into town, but that I'll call him if I receive another offer before he gets to town.  He appreciates that.

Then, he talks further about how he's taking classes to get his real estate license.  I'm thinking, the smart thing would be to wait until you have the license before buying so you can collect the commission, but didn't say that.  He also mentioned it had been hard taking all the classes because he wasn't sure about quitting his job.  I then spark up and say, Hey!  I've got an idea.  When you get your license, if you want to continue to work full time, you can pass off any potential buyers and sellers to me and I can pay you a referral fee!

His reply was, "Yes, this is a referral deal."  I say, excuse me?  He says he wants a referral fee for the purchase because it's his friend wanting to buy the house.  OHHH, you're not the buyer??  No, he's calling for his friend.  OK, in the state of Texas, I cannot pay you a referral fee without a valid, active license.  He asked if I could pay it afterwards.  I asked what they were teaching in real estate school these days.  WOW!

Anyway, I explained how it was illegal.  I also told him I would talk with the seller about potentially buying the title policy for the buyer as that would help the buyer with costs.  He sounded excited about that and he said that was nice of me to offer to help the buyer like that.  (Sellers paying for the title policy is almost customary in my area, but he doesn't know that).

We'll see if I can get this house under contract... 9 days left before they get back in town.  Oh, and before we hung up, he asked if I could email him any other homes in the area under $300k.  I told him I needed to talk directly with the buyers before moving forward.  Everyone is always looking for their piece of the pie even if they don't deserve it...

Comment balloon 18 commentsDonna Harris • October 04 2006 02:57PM


There all out there trying to get what they can. But that is a new one where somebody is trying to get a referal fee while trying to get his license. I guess he just wanted to get started right away on making that big money in this business
Posted by Tyler Wedel (THIRD TENNESSEE REALTY) almost 12 years ago

Nice catch Donna. Have you called him back? This sounds almost like a "checker" to me ...

As a real estate attorney told me during my classes, "it isn't you newbies that I'm worried about -- you're scared to death of making a mistake -- its those old farts that have forgotten all this stuff that has me worried."

So it doesn't make any sense that a "newbie" would be trying that...

Posted by Toby Boyce, MBA, Delaware Ohio (C.G. Boyce Real Estate Co.) almost 12 years ago

Easiest conversation in the world ... "wait, you're not licensed? Next!" Oops, I'm lapsing into RT-speak.

Get your license, then we'll talk. Alternatively, I have some coupons for a free ice cream cone at Dairy Queen that I'd be happy to share with you.

Posted by Jonathan Dalton (Realty ONE Group) almost 12 years ago
Not only can he not get a referral fee, but probably also not a good idea for him to be involved in the contract (acting as an agent without a license?). Glad you caught this, you acted very professionally.
Posted by John Novak, Henderson, Las Vegas and Summerlin Real Estate (Keller Williams Realty The Marketplace) almost 12 years ago
Makes you wonder if the person was a tester?  I have to think that he was, because I refuse to believe that he was that naive or thought that you would be willing to lose your license for a person you have never met...
Posted by Willie Norris (Keller Williams Realty) almost 12 years ago
Yes, people like that usually end up being a massive waste of time anyway.  They usually try to pull some BS at the last minute.
Posted by Home Design, Home Design and Real Estate almost 12 years ago
I don't think he was a tester.  There was too much of a language barrier, unless that's what they were testing.  I emailed him comps of the house and also the appraisal that was done and told him I needed to talk with the buyer before moving forward.  He did respond, promptly, to the email.  Hopefully they'll come in town and write it up!  I'll keep you posted!
Posted by Donna Harris, Realtor,Mediator,Ombudsman,Property Tax Arbitrator (Donna Homes, powered by JPAR - almost 12 years ago
Big Brother is watching you.
Posted by Joseph Crespillo (Sellstate Realty First) almost 12 years ago
Tester or not you handled it correctly.  Here is GA we too can't pay a referral fee to an unlicensed person and when one is paid it is paid to the Brokerage not the agent.  Then it's between the agent and his broker as to who gets what piece of the referral.
Posted by Michael Roberts (Real Estate Professionals of Glynn) almost 12 years ago
Tester -maybe or maybe not. It doesn't matter. You handled it correctly. Being ethical in everything you do IS important. 
Posted by Ed Bartley (Executive Realty - Brio) almost 12 years ago

You handled it well. 

I really don't see why you can't pay referral fees to someone who has an active license; it doesn't make sense.  It's your commission, you should be able to do with it what you choose.  If the state of Texas (or California) trusts you to handle millions of dollars worth of real estae transactions, why can't they trust you to manage the transaction (with your license on the line) and pay whomever you choose for marketing costs.

I know, I know that it's illegal.  I'm not suggesting you beak the law.  I'm suggesting that the law is stupid. 

Posted by Brian Brady, 858-777-9751 (San Diego VA Home Loans/858-777-9751) almost 12 years ago
Sounds very fishy to me. As for paying someone a referral fee who isn't licensed, its a very, very bad idea. Reason being is that EVERYONE who was going to buy, knew someone who was buying, etc would want a referral fee. What happens when everyone is getting a piece of the action?  Prices go up.  Marketing costs go up. And the big loser would be the consumer, not to mention the endless possibilities for fraud. -Charles
Posted by Jacqulyn Richey, Las Vegas Real Estate (Prominent Realty Group) almost 12 years ago

I agree with Brian. When you earn the commission, you should be able to do with it what you want.

Posted by David Williams ( almost 12 years ago
Certainly sounds like a scam to me!  Go figure.... just another hand to reach inside your pocket!
Posted by Dan Jungclas, ABR, ePRO, Broker (RE/MAX of Naperville) almost 12 years ago
...I've heard of "Investors" trying to get referral fees...but not of someone in the process of getting his license. Live and Learn I guess.
Posted by Sabine Pyrchalla almost 12 years ago
What they don't teach you in Real Estate School... how this business really works!  Maybe he just figured he was entitled to a referral because he was the procurring cause...???  Keep an eye on this guy ( better make that both eyes).
Posted by joanne Douglas (Terrie O'Connor Realtors) almost 12 years ago

I agree with Brian Brady, some of the rules Real Estate Councils and Boards have are about monopoly.  How someone gets a refferal or a sale is up to them.  As an Investor the term 'Bird Dog' gets thrown around.  I have bought multiple homes through one guy who refers all his friends.  I gave him what he wanted when he sold his house to me and he tells others about how great it was.  I reward him for it. 

What is a non-licensed advocate of who you are and what you do worth to you.  Why would someone use you or refer you if you provide the same excellent quality as another professional?  All things being equal I send them to the one who gives me the shopping spree or cold hard cash. 

I guarantee if I refer anyone to anybody be it my realtor, broker, lawyer, or any other power team member I'm going to make sure they know my help.  My lawyer had to hired extra staff with all the referrals we've given him.  And I get some nice freebees.  My back is never itchy cause the professionals I work with don't have an itchy back where I'm concerned.

Reciprocity is in effect with everything.  You help me, I help you and its the same as I help you, you reward me and You help me, I reward you.

The 'realtors' law isn't just stupid its rediculious and I'd say there are fewer leads given to realtors cause its of no benefit to someone to pass on the fact that aunt Flo and uncle Jim are thinking of selling and getting a smaller place closer to their retired friends and on it goes. 

Give your word of mouth some fuel.

Posted by Keenan Tameling (Libertas Holding Inc.) almost 12 years ago
If you want and your broker approves you can ask him to give proof he is in RE school and then offer to contribute the 25% you would give a referal fee to the buyer twards closing cost. THat would be legal. TO help the friend of a future realtor. You can discount your fees to the buyer. Just not give money to the want to be agent.
Posted by Christine Adler, SE Palm Beach, Broward & NE Miami-Dade Counties FL ( almost 12 years ago