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2 Responses to “A question to commercial real estate brokers Re: Out of state deals?”

1. zeuz said:

   Apr 30, 09 at 8:04 am

   Commercial real estate transactions across state jurisdictions are tricky. Some states allow "referral fees" to be paid, and others do not.

   My way of handling certain transactions is to work as a "consultant", and charge consulting fees. The scope of work includes:

   a) Interviewing the client to learn the type of properties would be suitable for his business needs.

   b) Finding the properties.

   c) Vetting local licensed real estate brokers (if necessary) to submit offers and negotiate.

   d) Assistance in arranging financing.

   e) Assistance in arranging appraisals.

   f) Assistance in establishing a market price, and outlining an appropriate offer.

   g) Critiquing the escrow documents (i.e., the true real estate agreement)

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   My fee is based on an hourly rate, subject to a minimum fee and a maximum fee. The minimum fee ensures I receive an appropriate commission. The maximum fee protects the client from paying too high a commission to all real estate licensees in the transaction.

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   As you can see, essentially, I have converted the standard real estate fee for commission into a fee for service. That allows me to work across all jurisdictions, because I’m not the one who is actually negotiating the purchase.

2. rich8259 said:

   Apr 30, 09 at 8:36 am

   Each state has its own rules so you may want to be more specific which states you are alluding to. I have my brokers license in California, Nevada and Arizona and all three states handle things differently.

   In California and Arizona, you must refer it out to someone licensed in that state and they can legally pay you a referral fee which can be negotiated between the two parties. Referral fees vary depending on size of deal and the involvement in the deal of the referring party. If it is just a casual aquaintance that you just met, you may want to refer out the client and accept a standard 10% fee. If it is an intimate client and you want to be involved in the transaction then you can negotiate for more. The problem is that you can not be hands on and have to be at the mercy of the licensed agent. Situations like this make it advantagous to work for a national firm.

   In Nevada, you can actually get sponsored by a Nevada Broker and get approval from the Nevada DRE on a transaction by transaction basis. This works great if you are only doing one or two deals. If you think there might be more business to follow then it behooves you to get licensed in that state.

   I suggest you go to the DRE website of the state or states you are interested in and they should have a code section for you to reference. Good Luck

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