Kaltham313, Home Buyer in Los Angeles, CA

A friend asks me to find a house for him since he is out of state. I am not an agent, so I contact one agent and she found a great house.

Asked by Kaltham313, Los Angeles, CA Mon Sep 6, 2010

My friend is ready to buy now. How much should I ask for my involvement since my friend is not going to give me anything? And should I make a deal with the agent or with seller?

Help the community by answering this question:


Here's a site that can help you understand the rules in California. http://www.brewerfirm.com/article-splits-kickbacks-fees.html

If you simply brought the parties together then you can legally get a "finder's fee', but keep in mind since you never asked anyone for a finders' fee in the beginning then they will not feel inclined to give one now.

As with any business dealings whether money is involved or not it is best to figure these things out ahead of time so everyone understands the boundaries and rules of the transaction.

Web Reference: http://www.soreal.biz
3 votes Thank Flag Link Tue Sep 7, 2010
Hi this is kaltham313,
Thank you for you answers, I really learned a lot from you. However, I would like to say that where i and my friend came from, everyone involve in a deal like this will get a share of it from the house owner whither you are a licensed agent or not, however its look like a different case in the US as i learned that from you all. So my plan was to get something out of this with him knowing that. I will help my friend as much as I can until he find the house that he wants. If i will find someone who would like to share the compassion with me that will great and i will let my friend knows that too, if not i am going to ask him for my share.
Thank you so much
1 vote Thank Flag Link Wed Sep 8, 2010
To all of the agents who are not from California. Know our State regulations before criticizing a member of the Trulia community who is asking a valid question.

In California which is where Kaltham is from there is a legal finders' fee that is allowed. What Kaltham needs to do is to have a "Finder's Fee", agreement drawn up by a real estate attorney.

There is nothing under California law prohibiting an agent from giving a "Finder's Fee", to an individual who is not licensed, so long as the finder does not perform any services requiring a license.

In California, a finder is someone whose only act is introducing a prospective buyer or seller to one another or to an agent. Several cases have defined a "finder" this way; "The finder is a person whose employment is limited to bringing the parties together so that they may negotiate their own contract".

Web Reference: http://www.soreal.biz
1 vote Thank Flag Link Tue Sep 7, 2010
Amen - (which means "so be it").

Let me get this straight...you helped out a friend, now you want to be paid?

Are you high?

Is it all about "make a buck"?

Thank you, no need to answer, I got the message.
1 vote Thank Flag Link Tue Sep 7, 2010
Keith Sorem, Real Estate Pro in Glendale, CA
I work with sellers of this type a lot of the time. I do offer a referral fee to all my clients that bring me new clients no matter their relationship. Please feel free to email me candcreo@earthlink.net. I would love to help you and your friend
1 vote Thank Flag Link Tue Sep 7, 2010
Amazing thought that you would want your friend to pay you for doing them a favor by making a phone call for them. I think you should have let your friend know up front that you would expect them to compensate you for contacting a Realtor for them.
1 vote Thank Flag Link Tue Sep 7, 2010
If you are not licensed, the agent cannot pay you. Your friend is the one who asked you to perform the service and that is who you should be asking for compensation. The seller has already agreed to compensate the agent by the listing contract. Nobody agreed to compensate you. so if you expect compensation you should bring it up with the person who asked you to do the work.
1 vote Thank Flag Link Mon Sep 6, 2010
Maureen Fran…, Real Estate Pro in Birmingham, MI
As has been pointed out it is illegal for a real estate agent to pay you a "finders" fee. You may enter into a consulting contract with your "friend" for services. Are you perhaps providing translation services, transportation or doing his internet searching. These are not real estate functions so are not covered by the Realtor rules. Any payment he make to you is business income and should be reported on your tax returns. You did not say what services you have the skill and experience to offer.

Buying Real Estate can be risky if not done correctly and should be done with experienced agents, accountants and legal advisers. For example I know if a case where a seller and buyer did a land contract (Contract for Deed), but did not use a 3rd party escrow company to receive payments and dispense those payment to the seller's lender. Guess what, the buyer lost over $18,000 when the lender foreclosed on the seller because he did not pay has lender. The lender foreclosed, leaving the buyer with no way to get his money back.

You may want to help your friend out of the kindness of your heart and let him repay the favor later, but do him a favor and be sure he gets professional advice to avoid these buyer pitfalls.
0 votes Thank Flag Link Tue Sep 14, 2010
Are you a friend who is helping your friend or are you a service provider for him? If prior, then a true would not expect anything in return to help a friend (especially not risk losing a great house for a friend because he/she may not be compensated). If you are acting as a service provider, then you should have negotiated a compensation package with your friend before taking on this duty. An agent/brokerage is not allowed to give you a cut of commission for referral because you are not a Realtor and are not affiliated with a brokerage.

0 votes Thank Flag Link Sun Sep 12, 2010
Sylvia Barry,…, Real Estate Pro in Novato, CA
In my opinion it is the thought that counts not the results. I would have already given you a small restaurant gift card and another one if anything comes out of it.
0 votes Thank Flag Link Fri Sep 10, 2010
Kaltham: I am sure in your Country it is not uncommon however, referral fees here in the United States are handled differently from State to State. If you have any questions about the Referral Fee agreement please let me know.

Web Reference: http://www.soreal.biz
0 votes Thank Flag Link Wed Sep 8, 2010
Kaltham313, what would you be willing to offer your friend in the event that something goes wrong with the transaction, or afterward? Are you willing to be liable for any missteps that you or the agent makes?

Generally, it isn't so much that it is illegal to play real estate agent, but that when you do so, you have no legal claim to compensation, and that you can be held to the standards of a real estate licensee in court. So, let's say the house closes, and it turns out that the real agent didn't disclose a $100,000 defect ... would you be willing to share in that claim with the agent?

The correct thing to do, Kaltham, is to either do your friend a favor by passing him on to a good agent, or to tell him you can't help him.
0 votes Thank Flag Link Tue Sep 7, 2010
This is kaltham313
Thank you guys
i did not make the deal yet and my friend dose not know the agent yet. he is not going to give me anything out of the deal , so there is nothing i can do with that. what i need to know is , what can i do to get a good money out of this deal even though if that would require to go to another agent or another house. the deal is a 1 million house.
0 votes Thank Flag Link Tue Sep 7, 2010
If you referred your friend to the agent... I would ask the realtor for a finders fee or referral fee.. Most will pay you once the deal is closed.
0 votes Thank Flag Link Tue Sep 7, 2010
If you are not licensed, no broker or agent can you a referral fee or commission for yoru services. Some states do allow thank you gifts, in NH it is up to $50, other states i have seen are up to $200. if you are looking to be paid, you should have had an agreement with your friend before assisting them, does your friend know you were looking to be paid?
0 votes Thank Flag Link Tue Sep 7, 2010
If you want to be compensated for what you've done, then you need to arrange that with your friend, the party you have serviced. You cannot be compensated by an agent unless you have an active license, and the seller has a hefty bill to pay in this transaction already to compensate the licensed agents involved in the transaction.

When it comes to money, it is ALWAYS better to make arrangements up front, and generally better when disputes about money do not involve friendship - because all too often even if money does exchange hands, the dispute aspect hurts the relationship.

Good luck to you!
Jeanne Feenick
Unwavering Commitment to Service
Web Reference: http://www.feenick.com
0 votes Thank Flag Link Tue Sep 7, 2010
Kaltham if your friend is not going to give you anything for your time and involvement that is up to your friend. You should make it clear to your friend that you looked at this as a bussiness transaction and not as something to be done out of friendship. You helped them find a nice house and should not and can not "make a deal with the seller or agent". Your friend should compensate you for your time and any money you spent to help them, After all that is what friends do, help each other out.
0 votes Thank Flag Link Tue Sep 7, 2010
Hello Kaitham and thanks for your post.

As the others have mentioned, you will not receive any compensation from the broker upon close of escrow and it is illegal for you to obtain payment here in California unless you are a licensed real estate agent, and the referral fee is paid to your broker--not to you, personally. As the person who helped in the transaction, you will likely get a nice gift card from the agent as a token of appreciation, but payment of anything more than a token gift is unlikely from the broker or the agent.

As Ryan correctly noted below, your friend, however, is not constrained by these rules and can pay you for your time.

Good luck!

Grace Morioka, SRES
Area Pro Realty
0 votes Thank Flag Link Tue Sep 7, 2010
As previously stated if you are not licensed, it is illegal for a broker to pay you any compensation from the transaction. Your friend is free to compensate you in any way that you both agree on. If you are licensed then you could be paid a referral fee that is typically 25% of the buyers side commission. The agent can give you a thank you gift but it can not be tied to a percentage of the commission and can not be a contingency of you giving them the referral. For example it is illegal for the agent to say I will give you a $200 gift card if your friend buys with me. But if after the transaction they send you a gift card as a thank you that was unsolicited that is legal.
0 votes Thank Flag Link Tue Sep 7, 2010
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