Question Details

André,  in South Africa

May I reward a friend for a positive lead?

Asked by André, South Africa Wed Jan 23, 2008

I believe that it is illegal for a licensed real estate person or company in the US to pay a reward or referral fee for a real estate lead obtained - to an unlicensed person. However, should I as a licensed real estate professional in South Africa send a lead of a buyer or seller in the US to you guys, I trust that you are allowed to pay me our pre-negotiated per centum of total commission after closing. Here is my question: Am I allowed to AFTER I have received my remuneration in South Africa for the successful closing in the US, pay or give a reward (from South Africa) to the unlicensed person in the US who gave me the initial lead via a phone call of a property going up for sale in the US? Remember that I am a licensed real estate agent in South Africa, and NOT in the US and that this is legal from my side! What about your laws? May I proceed with paying this person in the US? Please help!

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RCW.. I don't think you followed Andrés question.

If I understood it correctly, he's asking: Can he reward a U.S. civilian (non Realtor) for a referral for giving him a lead that lead to a referral fee, received from a closed transaction here in the states.

In other words, someone in my area calls André, and says ... "the guy next door is going to sell his place".. call you Realtor buddy Elvis who works here in the U.S. and give him the lead... and for that lead, Elvis will probably pay you a referral fee (allowed, since André is a real estate agent, right?). After that transaction, wherein I pay André a 25% referral fee, André sends his friend $250.00 finder's fee for the referral.

Since the recipient of the fee is not a Realtor... no foul.. Since, according to André S.A. rules allow him to pay a non-licensed person... where's the problem?

The governing body, over this referral fee, should be the RSA real estate licensing body, and since they have no problem with it, why should we? Certainly NAR doesn't come into play, the recipient isn't a Realtor. The local MLS has no complaint... again, not a Realtor. Where's the harm?
2 votes Thank Flag Link Thu Jan 24, 2008
Alan May, Real Estate Pro in Evanston, IL
I would imagine that the overriding "law" that you need to comply with, in this case, would the rule of law in South Africa. If it's legal for you to offer a "financial reward" to a non-licensed person based on the rules in South Africa, then I'd think it's okay.

There certainly are no rules, in any State in the U.S. against a civilian receiving that remuneration. A civilian is under no compunction to follow our licensing laws. I don't see the conflict. Remember, he's not asking if a U.S. agent could make that payment.... he's asking if the South African agent can make that payment, and I don't see any barrier.

Disclaimer: I am not a Real Estate Attorney and do no practice in South Africa, and even my wife will tell you, at every opporunity, that I'm often full of lard, so don't listen to me.
3 votes Thank Flag Link Thu Jan 24, 2008
Alan May, Real Estate Pro in Evanston, IL
Hi Andre,
We have international listings and do cooperate with international agents. Real Estate laws are governed state by state. I'd do a quick google search for a real estate lawyer in the state where you want to give a referral and see if they have some comments on their blog.
2 votes Thank Flag Link Wed Jan 23, 2008
In my humble opinion, it really doesn't matter where Andre' lives and practices real estate as a licensed agent. Technically, the non-licensed individual somewhere in the USA is practicing real estate without a license (hence the issue). I feel pretty confident that most if not all states have regulations in-place to discourage or prohibit unlicensed real estate brokerage. It would be no different if this same unlicensed individual were practicing law or medicine without a license (each state has laws to prohibit or at least severely restrict such activities).

I frequently am asked by neighbors who are unlicensed and live near my listings whether I would pay them a finder's fee or referral fee if they send me a buyer for my listing or refer me to another neighbor thinking of selling their home. My answer, of course, is "no" because that individual is unlicensed and, in GA, the real estate commission prohibits me from compensating an unlicensed individual. Hope this gives you some additional perspective. Warm regards - Ted
Web Reference:
1 vote Thank Flag Link Sat Jan 26, 2008
Vicki Masell…, Real Estate Pro in Duluth, GA
Andres, I agree with Elvis because you are not licensed here in the US, are policies don't apply to you. Not knowing what SA polices are regarding referrals I cannot speak to that - if you say its ok then there should not be a problem. FYI, there could be or will be tax issues from your gift depending on what it is, for your US referral.
1 vote Thank Flag Link Fri Jan 25, 2008
I don't know about other states, but in Illinois it's clear:

No licensee may pay a referral fee to an unlicensed person who is not a principal to the transaction. In order to meet the license requirement, the person receiving the referral fee may be duly licensed as a real estate broker in either Illinois or the person's state or country of domicile. If the person's country of domicile does not have a licensing statute for real estate agents, then, in order to receive a referral fee, the person must comply with the laws, if any, of his or her country concerning the practice of real estate brokerage business.

Also remember, if you are dealing with an agent, all payments must go to that agent's sponsoring broker who then makes a disbursement according to the agreement between the broker and agent.

Hope this helps.
1 vote Thank Flag Link Thu Jan 24, 2008
You definitely need to check into the state real estate laws in which the initiating lead resides. In Texas, we can give a gift of up to $50 to an unlicensed and we do pay varying referral fees to other licensees.
1 vote Thank Flag Link Wed Jan 23, 2008

Good question. We can pay licensee's in other states. I am not sure about South Africa. My guess is probably so as you are licensed. I will run it my our commissionor as we are in state meetings this week.
1 vote Thank Flag Link Wed Jan 23, 2008
Pam Winterba…, Real Estate Pro in Danville, VA
Folks, the American agent gets a lead from Andre and sends Andre his deserved referral fee. What Andre does with that money is of no consequence to the American agent. Andre could send it to his brother, his sisters boyfriend, his uncles second-cousin twice-removed sister-in-law and the American agent has nothing to do with any of it. Andres tax ramification and legal action is Andre's responsibility.
On the other hand if the money was sent to the uncles second-cousin twice-removed sister-in-law from escrow in the US then the American agent would have knowledge and that is not permitted.
Web Reference:
0 votes Thank Flag Link Sat Jan 26, 2008
Jed Lane, Real Estate Pro in San Francisco, CA
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