FAQs

In certain jurisdictions, a license is required because the licensing statutes are very broad and were drafted with the intention of ensnaring any activities designed to “procure prospects” for a real estate transaction (i.e., customer acquisition). Because customer acquisition is such a critical component of the real estate brokerage business and there are a multitude of regulations restricting a broker’s activities in this area, the laws in many states were designed to prevent an unlicensed and unregulated entity from capturing a consumer’s business and thereafter referring the underlying transaction for compensation. As a result, many states employ a statutory definition of “real estate broker” that is broad enough to encompass lead generation activity. For example, a typical statute requires a license for any company that “assists in procuring prospects for the listing, sale, purchase, exchange, renting, lease, or option for any real estate” or “holds himself or herself out as a referral agent for the purpose of securing prospects for the listing, sale, purchase, exchange, renting, lease, or option for any real estate.” Websites and applications that collect data on consumers and provide this data to real estate brokers seeking the consumer’s business may be implicated by such statutes.

A license may be required in multiple states. Although there is a longstanding exception to the licensing obligation for out of state brokers making an occasional referral, this would not necessarily apply to a company that intentionally draws consumers into an application for the purpose of referring the consumer’s information for a fee. In a state by state survey of real estate regulators conducted by ComplySafe, many state regulators opined that when a company intentionally markets to real estate consumers in their state, this constitutes evidence of the company’s “jurisdictional intent” and obligates it to obtain a real estate license. However, some state regulators take the opposite view and do not require a license so long as the lead generation firm has no physical presence in the state and no contact with the consumer after the lead is generated.

This depends on how the listings are marketed. If a company holds itself out as offering the properties for sale or lease, then a license will likely be required. If a company merely operates as a conduit for listing brokers or homeowners to publish information, then a license is not likely to be required.

Yes. An unlicensed marketing company usually can receive a click fee or a lead fee triggered by the consumer’s actions following the click. However, an unlicensed entity may not receive any portion of a real estate brokerage commission nor can its compensation be tied, in any manner, to the closing of a real estate transaction.

Yes, in certain states. If the company’s website collects and passes data from consumers, many states require that the company maintain a mortgage license and undertake other compliance obligations. Although many state mortgage licensing statutes do not directly address customer acquisition, they are often broad enough to encompass lead generation. Because of this, the determination of when a license is required turns on the type of consumer information collected by the company and the opinion of the regulator charged with enforcing the statute.

Yes. An unlicensed marketing company usually can receive a click fee or a lead fee based on the consumer’s actions. However, an unlicensed entity’s compensation may not be triggered by closed mortgage transactions.