Short term rental commissions

[Dolev Zaharony]

Hello,

We are doing short-mid term rental for folks that are relocating to our area (Raleigh, NC). Since we are at full capacity almost all of the time, we are looking to expand and add more homeowners to our network, provide them with leads (tenants) and get a fee for each one, somewhat similar to Airbnb. We recently learned that we have to obtain a real estate license in order to do that and trying to see if there are other ways? Like if we bring a realtor as a part-time employee who will handle those commissions using his licenses? Love to get your thoughts or if you have dealt with a similar situation?

Thanks!

[John Underwood]

I would see if you could be commission based with a realtor and not hire them as a part time employee. 

[Robert Gilstrap]

Couple of ways to approach that comes to mind:

In every state to my knowledge if you are a "principal" in the transaction then you are exempt from any licensing requirement. So for instance; say you master lease a property then you put the tenant in there as a sub lease and you collect your fee out of that would be one way.  Don't take my word for it since I'm not in North Carolina, go find out.

Some states allow for referral fees but many do not. Check your local laws for that. 

Partnering with an agent would obviously be an easy option as you mention; then he/she satisfies the regulatory stuff and you can get him/her to do some of the heavy lifting and everybody gets paid.

[Dolev Zaharony]

Thanks, Robert and John. So I already spoke with my lawyer, who confirmed that in NC we can't do any referral or commission-based transactions without a license. John, to your point, my question is if it's better to just sign an agreement with the realtor to get a commission for any deal we get/he processes or it's better to have him as a commissioned based employee? 

[Dolev Zaharony]

ok, I was able to get some info from the Real Estate Commission, but find it pretty confusing:

If the licensed agent wishes to be paid or to pay the LLC then the LLC would have to obtain a firm license. If she is a full broker she can obtain a firm license for the LLC and be the qualifying broker. If she only wants to be paid through the LLC and not use it for advertising purposes or to affiliate brokers then the firm would not need a broker in charge, just a qualifying broker. No compensation can be paid to an unlicensed entity.

[Chris London]

@Dolev Zaharony: Here is the 2021 update from the NCREC.

[Dolev Zaharony]

Thanks, @Chris London, I think at this point I learned that it has to be someone with a license, I'm trying to understand the vague response from the NCREC about bringing in the agent, like what do they mean by qualifying broker? 

[Chris London]

@Dolev Zaharony

Qualifying broker = BIC (broker in charge).

In order to qualify for BIC Eligible status, a broker must:

1. hold an active license;
2. have obtained at least two years of real estate brokerage experience equivalent to 40 hours per week within the previous five years;
3. submit the Request for BIC Eligible Status and/or BIC Designation form (REC 2.25); and
4. complete the 12-hour BIC Course within one year before submission of Form 2.25 or within 120 days after submission of Form 2.25.

In your previous comment, your attorney hit the nail on the head, you can't earn a commission/referral w/out a lic. 

[Chris I.]

As far as I understand, he can't get any part of the commission during the actual transaction.  Meaning you can't get paid from a broker at any point.  But once the transaction/deal is done, there is nothing stopping the realtor from paying him money (now out of his pocket) from the commission money they just earned for some service rendered (the outside lead?).  I don't know why a realtor would bother to make this outside transaction deal though.  I'm also not a lawyer so take with a grain of salt