Question about marketing a property I don't own...

[Kyle Conrad]

North Carolina law states that "it is unlawful for an person or business entity to act as a broker directly or indirectly, without a license. The definition of real estate broker is a person or entity that lists, sells, buys, auctions or offers to do any of the foregoing or otherwise negotiate the purchase, sale or exchange of real estate or improvements thereon for others for compensation. There are two exceptions to receiving compensation without a license. 1. sharing compensation with parties to the transaction (the buyer or seller) and 2. payments to travel agents for vacation rentals."

My question is this: The seller I'm dealing with has agreed to allow my to market his property to my buyer's list in return for 50% of the profit I make on the end-sale (I'd pay closing and all expenses.)

Per NC law, how can I legally market a seller's property to my buyer's list? According to my attorney (who has very little REI experience) the 50% profit cut would still qualify as a commission. My thoughts are that I may could a) agree to actually BUY the property from the current seller once I have another offer in writing, then do a 'double close' and resell the property to the end-buyer or b) sign the contract with the seller, then assign it to the end buyer without ever closing on it.

Either way, I'm unclear on whether it's actually illegal to market a property I don't own.

Does anyone have any experience with this?

[Bill Gulley]

Several issues;

1. NC law is pretty clear, for compensation means financial benefit regardless of who pays it or how you structure the transaction. You need a license.

2. Advertising property you don't own, this too is illegal since you are not a lawful representative, by exceptions, of the owner. 

3. How will you show the property? Another snag requiring a license, if the owner contracts how do you collect? Is your fee on the HUD? If not you can have serious federal settlement and tax issues.

4. "double closings" are no longer allowed under ALTA, it's an issue with escrow and good funds availability to close. 

5. For 50% of profit, is this in a contract? Skipping the fact that such a contract won't be valid, (intent and ability to buy) an implied partnership can get you hung for 50% of the losses as well.  I suggest you always stick to a specified dollar amount in or a stated amount plus a %. How you word things matters!

6. Changing title without consideration to an unrelated party can be seen as a maneuver to circumvent law.

One true solution is to buy the property, use seller financing, you close, then sell and payoff the note. Simple :)