Home Buying in 07726>Question Details

Vrajik, Home Buyer in 07726

Real estate finders fees in New Jersey.

Asked by Vrajik, 07726 Tue May 8, 2012

I began buying real estate properties in New Jersey and renting them out. I work with one agency only, the agency sells properties to me and then lists them for rent. So far I gave the agency 7 deals (sales and rentals). My question is, it illegal for me to ask the agency to give some money back to me on each new transaction lets call it finders fee. I am asking for 10% of what I bring into the agency. So that if total commission is 5,000 being split between buyer agency and seller agency. My cut would be $250

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V -
Sure there are givebacks that happen in some cases. I am sure you can ask and see what can be worked out. As Deb has noted -

“Buyer rebates are legal in New Jersey, but must be disclosed and agreed upon in advance. Therefore, if the agency with which you work agrees to enter a rebate program with you for your purchases, that is legally compliant.”

Sure there are givebacks that happen in some cases. I am sure you can ask and see what can be worked out. Terms like “referral” and “Finder’s Fee” would not pertain to you as an unlicensed buyer.

I am guessing by your thoughts that the one of your clients has come to you and asked you to give them a 10% of your pay or off your service that you perform for them -or- You feel that the agency's work is of minimal value, you do a lot of work yourself, so you should also take a portion of the profits.

Why not just get your Realtors license? Pay the fees involved, the advertising, the legwork, the paperwork and just do it yourself? That way you can absorb more of the commission.
By your statement below "both require lots of schooling and actually working as a realtor" seems that you do not want to take the time to earn the commission that you want to take back.

It costs substantially more than $300 to become an active Realtor.

Let me know what happens when your boss wants 10% of your pay handed back just because he feels he wants it.
4 votes Thank Flag Link Tue May 8, 2012
Unfortunately, Tim is incorrect. According to NJ State Law it is illegal for anyone to receive any fee for real estate unless he/she holds a NJ Real Estate License. My recommendation is to get your license which costs about $300 for the class and then you can get any referral fee you negotiate on each transaction. You may find it to be well worth it to do so. When I was actively buying properties I would get that on each purchase as I held my license. Otherwise, it is not legal for you to receive anything from the Broker for the deals.

Hope that helps.
1 vote Thank Flag Link Tue May 8, 2012
Good Afternoon Vrajik,


If you are a real estate agent you can indeed collect a referral fee if requested prior to listing the property and signed in writing with the agreeing company.

If you are not a real estate agent than perhaps you should factor that into the commission being paid out to listing agent. If you do many transaction like this the agent might agree.

Good luck
0 votes Thank Flag Link Thu Feb 26, 2015
Hi Vrajik

Im pretty sure, you need to be licensed to get paid. It's worth for you to take the sales license class and pass the state test and get you referral license.
The class is very educational and same time you will make some $.
0 votes Thank Flag Link Tue Feb 17, 2015
Hi,
I believe it is now legal to collect a finder's fee in New Jersey. There are certain forms that you would need to fill out ahead of time. The fee would be paid to you at closing and would be on the respa statement. I would assume if you were getting a 10% fee on the selling agency commission that the 10% would be coming off the top. I think the fee is on a buyer commission only, but a listing fee is always between a buyer and a seller. The agency you work with may have a policy of not paying a fee, but if you have been happy with the results, you might want to stay with them anyway.
0 votes Thank Flag Link Tue May 8, 2012
Vrajik:

Getting a license will require some schooling, the state mandates 75 hrs. However, you do not need to be a Realtor or pay lots of fess to maintain it or worry about continuing education. . What you can do is get a referral license, which typically has minimal yearly fees(e.g $150/yr) and will exempt you from continuing education and you will not have to be a Realtor. Total costs to pay for school and licensing fees should not be more than $700 in this case. There are some referral groups which will pay as high as 90% splits, which again make this a good option as well as easy to deal with. Plus it means you can make money for referring other investors, sellers, buyers, etc. to brokers.

Many others on Trulia have mentioned buyer rebates, however your question was about a finder's fee. They are very different. More importantly, if a broker decides on offering rebates, rebates have to be offered to all buyer clients equally, otherwise it is discriminatory(similar to the practice of offering home warranties to sellers). As a result, few brokerages in NJ will engage in this practice. As a Broker and a licensed NJ Real Estate Instructor, these are topics I am well versed in and if you wish to have more of a dialogue, just let me know and I may be able to point you in the right direction.

Hope that helps.
0 votes Thank Flag Link Tue May 8, 2012
In order to obtain a referral license, you would need to complete the classes for a salesperson's license and pass the state test. The education and testing process is the same for an active real estate license or a referral license. Licensees who maintain active licenses are required to partake in continuing education (12 hours every 2 years.) Referral licensees are not required to take continuing education.

The third type of real estate license is a broker's license. You need to have experience and additional education to pursue a broker's license. A broker's license is required to manage real estate salespersons and office, or own a real estate brokerage. A very small percentage of real estate salespersons become brokers.
0 votes Thank Flag Link Tue May 8, 2012
Deborah Madey, Real Estate Pro in Red Bank, NJ
MVP'08
Contact
A brokerage can only pay a commission or fee to one of the licensed agents in their own agency, or to another broker.

Buyer rebates are legal in New Jersey, but must be disclosed and agreed upon in advance. Therefore, if the agency with which you work agrees to enter a rebate program with you for your purchases, that is legally compliant. That rebate is only applicable to the buyer agency commission, not the entire real estate fee.

You may not receive finders fees for bringing other clients to the agency. In order to receive any compensation for referrals, you will need to obtain a license. Many individuals hold real estate licenses solely for the purpose of generating referrals, and there is even a license category for "referral agents."

As it pertains to the agency finding renters for you. you are paying the listing broker who might be co-broking the deal if the other agency brings the renter to the table. Herein, you would not get a rebate....but you can try to negotiate the fee that you are charged to be less. You wouldn't receive a check, but a bill for a lesser amount. Be careful in your negotiations that you do not compromise your results by negotiating the fee too low. The end result of rentals is usually about accommodation and not much of a revenue generator for most agents. Perhaps on the listing side of the rental commission there might be some room.....but, proceed with open eyes and mind to the discussion.

Deborah Madey - Broker
Peninsula Realty Group
0 votes Thank Flag Link Tue May 8, 2012
Deborah Madey, Real Estate Pro in Red Bank, NJ
MVP'08
Contact
A "finders fee" can't be given but you can negotiate a commission with the listing agent.
0 votes Thank Flag Link Tue May 8, 2012
Ian thanks for your advice. I looked on NJ real estate commission website and I only see two types of licenses agent and broker both require lots of schooling and actually working as a realtor. Is there another type of license that you talking about ?
0 votes Thank Flag Link Tue May 8, 2012
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