Its a racket set up to sell more licenses and more memberships in the Realtors assn.

Why is it?  Because the legislators of that state voted on it and made it a law.

I can't speak for all states, but I know in Florida if there's a law, it's because the legislators passed it.

Is this a theoretical question?  Or something new from the Utah School of Real Estate?  

You talking bird dog fees?

Illegal in AZ and probably most other states.

Talking lead gen companies?

Not necessary if you properly market yourself, do a stellar job, lather rinse repeat. Your praises will be sung by those you do not need to pay.

A time WILL come when YOU, the exceptional, consistently successful agent, really don't need to do a lick of marketing (though you will for your clients) to draw business.

You'll find in time you will turn away or refer more business than you will take.

It will happen!

Most state laws prohibit the paying of referral fees to unlicensed persons. Federal law also prohibits this in most cases. This law was spelled out in the Real Estate Settlements and Procedures Act (RESPA), passed by Congress in 1974. It governs many real estate transactions in which the government is involved.

It's a good question. One reason is perhaps to reward those with a license.

The big data lead generators or even an individual "survey taker" don't need to be licensed as a real estate agent or broker, for them to gather (using questions on landing pages and other surveys etc.) and sell real estate leads, they will gladly take your 💰!

To take the real estate sales process further, yes, one would need to be licensed if acting as an agent/broker.

I need to say that my answer does not touch on "Bird Dog" fees, which I could legally pay out as an individual investor, but an agent/broker paying out "Bird Dog" fees...that is an entirely different story!

Hire an advertising and marketing company and pay them

It's intended as a level of protection for the consumer, so only trained and licensed people can receive compensation.

anyone can promote you.... the more people that promote you, the more business you'll have.... you can't pay an unlicensed person for a real estate lead.... 

Because it is the law here and probably many or most other states.

It's the law.  I've never questioned it.

It's the law.

Not sure what the reason was when the law was written, but it is illegal in N

Because the law says we can't John Henstra . Why would you need to know more than that?

I don't know the reason, but I have this come up as a possible option in my business once in a while.  Someone that is unlicensed would like to try and generate business for me, so I often wonder how to structure compensation for them.

I am sure that they can find someone to promise everything...

More than likely, an unlicensed person does not know where to start the marketing.

An unlicensed person is limited in what they can say about real estate to a consumer.

Eve

Dems da rules.

Ilegal here in AZ!  Plus an agent doesn't pay fees - all fees are run through a broker and I don't know of any broker that would consider breaking the law for a bird dog fee to an unlicensed person.  Before we pay any referral fees we make sure to have the brokers license as well as the agents license in our broker file.

Because it is illegal.  If you are asking why is it illegal, it's most likely because there are several laws created to protect all parties of a real estate transaction. Requiring a license obligates anyone involved in marketing real estate to follow all of those laws.

John, you better find the answer to this right away. 

Hire a person to do this for you.  Better to lead generate on your own.

It is a good idea to comply with the laws in your state.

unlicensed support staff are VERY VERY limited as to what they can do in Georgia.  An unlicensed person cannot discuss a home at ALL with a potential client so I have my unlicensed person take care of paperwork/transaction managment and I take care of potential clients.

It is the law.  

You can. You just can't make the compensation contingent on closing. It can't be a referral or "masked" referral. Who is saying that you can't? Show me the written law? There tons a marketing companies out there that don't have real estate licenses that charge a fee for there services that gets paid whether or not any actual leads result and whether or not any generated leads close on anything.

I have taken people to lunch, did favors and remained available to everyone. If someone wants to recommend me they do so. Its all good....

I'm sure each state has their rules about this. From what I hear, it is because they may get into a situation  where they're asked questions only a licensed person should answer. I also agree with Bob Crane - selling a RE license is a business in itself.

Here in NH they can, they can not write contracts, negotiate an offer or market a home in person. They can make calls, show homes and send out marketing.

Control and licensing fees are at the heart of the issue!