Bird Dog Fees in North Carolina: Legal or Illegal?

BACKGROUND

What is a bird-dog fee?

A bird-dog fee is a fee for connecting a buyer and a seller of real estate. The real term for this is a "referral fee". 

The “connector” usually doesn’t have the capital to purchase the deal, but they know someone who does. The connector connects the buyer with the seller and usually asks the buyer to pay a fee if they close.

THE PROBLEM

In North Carolina, if a person making referrals or hunting deals for others (the bird-dog) has a real estate license, they can collect fees without a problem--make it rain!

However, it’s a violation of N.C. real estate license law for a LICENSEE (a person with a license) to pay a referral fee, a.k.a. a “bird-dog” fee, to anyone that is UNLICENSED. Thanks, Debbie Downer.

WHAT IS THE IMPACT FOR UNLICENSED BIRD DOGS AND LICENSED INVESTORS?

If you’re an unlicensed bird-dog connecting sellers and buyers for a fee, you could get into trouble in North Carolina because you’re offering real estate services without a real estate license. You should call the N.C. Real Estate Commission and ask them for the proper guidance on what you can do.

Let me save you some time: they will tell you to get a real estate license. 

Furthermore, it’s a violation for licensees to pay referral fees to unlicensed people. Does it still happen? Sure, but…

Licensed real estate investors need to be aware of who they are paying and if they’re licensed or not. If you pay a referral fee to an unlicensed person, you are violating N.C. license law. You don’t want to put your investment business in jeopardy.

THE BOTTOM LINE

if you want to collect referral fees legally in North Carolina, get a real estate license!

If you're licensed and you plan to pay someone a fee, find out who you are paying before you cut that check! Make sure they are licensed, otherwise, you could find yourself in trouble! (I’m trying to save someone’s livelihood here.) 😊