Complaint Review: Realestateauctions.com - Illinois Internet

Realestateauctions.com has a presence in CA, TX, IL, NY, GA and FL as of Dec 2012. They plan to cover the whole US by spring 2013. It is a company created to organize auctions of property. They get people's attention on job search sites stating that they want to hire a Business Development Executive for your area. They say your compensation will be around 300k to 800k (which sounds too good to be true).

You are to develop a Team of 4 (you included) and you manage the other 3 Realtors. There could be one city and up to 5 or 6 counties you are over depending on the size of the population.

What they really need to say is that this is NOT a job, but a business opportunity which is structured like an MLM. You get a percentage of all listings (if any) created under you. They require you to take their $300 auction class... you get the picture...

It is NOT a job offer. I'm not saying it is illegal (although I don't know how you do this without being under a local broker??). You do have to have a real estate license. You have to pay your dues.

It is a risk if you ask me... just look at how many properties are actually in their auctions. There isn't enough being generated for the risk... plus they gain from your class fee, your monthly admin fee and 10% of your sales (not bad) BUT 50% of the rest goes to your team.

Go ahead if you want to take the risk... I'm not. I'm keeping with the traditional and proven license under my broker (which IS legal).

They just should NOT say this is a paid JOB!! It is a business opportunity at your own RISK!

HERE is a COPY of the Contract you must sign:
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Realtor/Team Leader
Independent Contractors Agreement
THIS AGREEMENT, effective from ___________________, to December 31, 2015 between RealEstateAuctions.com, an Illinois LLC hereinafter referred to as (REA), and _______________, hereinafter referred to as Team Leader/Realtor (TL):
WITNESSETH
WHEREAS, REA is now and for some time has been engaged in business as a real estate broker and is duly licensed to sell, offer for sale, buy, list or solicit prospective purchasers, negotiate the purchase, sale, auction, exchange, and rental of real estate, for another or others, has and does enjoy the good will of, and reputation for, fair dealing with the public, and
WHEREAS, REA provides through its website online listings, a lead management system, and other marketing and administrative support for its Team Leader, and
WHEREAS, the Team Leader is duly licensed by the State of _______________, and has enjoyed and does enjoy, a good reputation for being fair and honest.
NOW THEREFORE, in consideration of the promises and the mutual agreements herein contained, it is understood and agreed as follows:
1. REA agrees to make available to the Team Leader all its website listings and its lead management system, and agrees to assist the Team Leader in every way on a continuing basis by instruction, advice, information, and the full use of sales aids now furnished or developed in the future.
2. Team Leader agrees to study and master the fundamentals of selling as they apply to the listing and sales of real estate and auctions. Team Leader further recognizes that selling skills are the key to success in the listing and sales of real estate, and that selling skills can only be improved if the individual seeks improvement. Team Leader agrees to participate in such continuing education or personal improvement programs as are required by REA, by applicable licensing law, or regulation.
3. Team Leader agrees to apply his/her skill and best efforts to sell, lease, or auction any and all real estate listed with REA, to solicit additional listings for REA, and otherwise to promote the business of serving the public in real estate transactions, so that each of the parties hereto derives the greatest amount of profit.
4. The Team Leader shall read and comply with all national, state, and local laws governing real estate licensure and real estate transactions, as well as the Code of Ethics of the National Association of Realtors, of Real Estate Boards, and the by-laws of the local real estate board, and any future modifications or additions thereto. Team Leader agrees to join the Board of Realtors and to pay for same promptly when billed.
5. Team Leader agrees to provide the documentation necessary to meet company and state compliance auditing requirements. If the Team Leader fails to provide necessary paperwork needed for compliance purposes, then REA has the right to assess an appropriate fine for not complying. Team Leader agrees to pay the fine within said time. If fine is not paid prior to earning a commission, then fine is paid by deducting the amount from the commission.Page 2 of 5 REA Independent Contractors Agreement TL 10262012-1
6. REA shall determine the commission to be charged on all sales. Team Leader shall advise REA of any exception to the usual commission in advance. When Team Leader performs any work hereunder whereby a commission or other fee is earned, Team Leader shall be paid according to the following commission schedule. Commission schedules shall be subject to review and adjustments upon ninety (90) days notice or for special events/circumstances. All commissions due to a Team Leader shall be due only from the proceeds of a sale, and shall not be deemed to have been earned until the transaction closes and the funds disbursed to Seller. Commissions shall be determined as follows:
a. Team Leader will receive 90% of collected closed auction commissions earned for a closing that occurs under RealEstateAuctions.com in which they were the procuring cause. Team Leader agrees to split 50% of the 90% equally with three Project Managers that will work as a team of four to close auction properties.
b. Team Leader will receive zero percent of the Buyers Premium at auction. The Buyers Premium is normally 4.5% of closed volume and 5% is the standard sellers commission. If a listing is taken where 100% of the commission is paid through the buyers premium, the following division of commission will occur. In an example of a listing being taken with the seller paying 0% and the buyer paying a 10% commission, the total commission will be split in half, in which 5% would be considered the sellers commission and the standard splits would apply and the other 5% would be considered the buyers premium and go directly to the company.
c. Team Leader will receive 80% of collected closed sales commissions (non-auction) earned for a closing that occurs under RealEstateAuctions.com in which they were the procuring cause. All marketing expenses associated with traditional listings will be paid for by the sales agent.
d. Team Leader will receive 10% of collected commissions when one of their Project Managers closes a non-auction property or rental.
e. Team Leader agrees to give an additional 10% to their Project Manager when the Project Manager refers an auction listing.
f. No commissions are paid to RealEstateAuctions.com when the Team Leader buys or sells a residence that they occupy.
g. Team Leader will receive 95% of any earned commission on an investment property they personally buy or sell for themselves. Said commission must be at least 2.5%.
h. Team Leaders Designated Territory Number is # and covers the following County or Counties of:
i. Team Leader agrees to refer all listings outside of their designated territory to the REA Managing Broker or Team Leader where the referring property is located. The referral fee will be 20% whether incoming or outgoing, unless otherwise negotiated between the two TLs. As an example, if a Team Leader from St. Louis refers the Miami Team Leader a property and the Miami Team Leaders 80% commission is $10,000, $2,000 of this $10,000 would go to the St. Louis Team Leader. Referrals are optional with buyers outside of the Team Leaders territory. The Team Leader can close on any property outside of their territory and earn a full cooperating commission when representing a buyer.Page 3 of 5 REA Independent Contractors Agreement TL 10262012-1
j. There will be a $100 contract admin fee taken off the top of each sale transaction, $50 if the collected commission is $1,000 or less.
k. There will be a charge of $19.00 per month charge for an email address along with Lead Management System (LMS) usage. This $228.00 annual charge will be taken out of the first closing.
l. There will be a one-time charge of $300.00 for real estate auction training. This fee will be paid upon the signing of the ICA agreement. You will be learning confidential and proprietary information on our systems and on the auctioning of real estate, causing this fee to non-refundable, whether one session has been taken or all ten training sessions.
m. Upon reaching $20 million in closed sales with RealEstateAuctions.com, Team Leader will be given shares in the company. The Team Leader will share in a pool of 3.42% of the shares in RealEstateAuctions.com. The team leader will have one of the 342 shares that will be divided equally between all the Team Leaders. The Team Leader will become a member in a 342 member LLC that will own these shares. In addition to closing $20 million in sales volume to be a member of this LLC with an ownership interest, Team Leader must not leave the company. Upon resigning or being dismissed, the shares would automatically go back to RealEstateAuctions.com.
7. In no case shall REA be personally liable to Team Leader for any commission not collected, nor shall Team Leader be personally liable to REA for any commission not collected.
8. This agreement does not constitute a hiring by either party. The parties hereto are and shall remain independent contractors bound by the provisions hereof. Nothing herein shall be construed so as to create an employer/employee relationship between REA and Team Leader. Team Leader shall be solely responsible for the payment of all State and Federal Taxes incurred as a result of any commissions paid hereunder. It is also agreed and understood between Team Leader and REA that REA will not withhold or pay on behalf of the Team Leader or REA any amount relating to federal, state and local income tax, unemployment compensation, workers compensation or any other employer liability or responsibility. Team Leader and REA agree and understand that the Team Leader is totally responsible for the timely reporting and payment of all income taxes and other governmental liabilities resulting from the performance of his or her services hereunder, which responsibility is not borne nor shared by REA in any manner whatsoever.
9. Team Leader agrees that for the duration of this agreement, any and all listings of property, and all activities in connection with the real estate business shall be taken in the name of REA. Team Leader shall file such listings with REA within twenty-four (24) hours after receipt of same. All listings shall be and remain the separate and exclusive property of the REA.
10. Either party may terminate this contract, or the association created thereby, at any time upon written notice given to the other. REA may also renew and/or modify this agreement at any time before the termination date.
11. When this agreement has terminated for any reason, the REA shall retain any listings which Team Leader has obtained, and which are still in effect at the time of his/her termination. If Team Leader has transactions pending that require further work normally rendered by Team Leader, REA may perform the work required. There shall be a deduction from the Team Leaders normal share of the commission for this service in an amount determined byPage 3 of 5 REA Independent Contractors Agreement TL 10262012-1
j. There will be a $100 contract admin fee taken off the top of each sale transaction, $50 if the collected commission is $1,000 or less.
k. There will be a charge of $19.00 per month charge for an email address along with Lead Management System (LMS) usage. This $228.00 annual charge will be taken out of the first closing.
l. There will be a one-time charge of $300.00 for real estate auction training. This fee will be paid upon the signing of the ICA agreement. You will be learning confidential and proprietary information on our systems and on the auctioning of real estate, causing this fee to non-refundable, whether one session has been taken or all ten training sessions.
m. Upon reaching $20 million in closed sales with RealEstateAuctions.com, Team Leader will be given shares in the company. The Team Leader will share in a pool of 3.42% of the shares in RealEstateAuctions.com. The team leader will have one of the 342 shares that will be divided equally between all the Team Leaders. The Team Leader will become a member in a 342 member LLC that will own these shares. In addition to closing $20 million in sales volume to be a member of this LLC with an ownership interest, Team Leader must not leave the company. Upon resigning or being dismissed, the shares would automatically go back to RealEstateAuctions.com.
7. In no case shall REA be personally liable to Team Leader for any commission not collected, nor shall Team Leader be personally liable to REA for any commission not collected.
8. This agreement does not constitute a hiring by either party. The parties hereto are and shall remain independent contractors bound by the provisions hereof. Nothing herein shall be construed so as to create an employer/employee relationship between REA and Team Leader. Team Leader shall be solely responsible for the payment of all State and Federal Taxes incurred as a result of any commissions paid hereunder. It is also agreed and understood between Team Leader and REA that REA will not withhold or pay on behalf of the Team Leader or REA any amount relating to federal, state and local income tax, unemployment compensation, workers compensation or any other employer liability or responsibility. Team Leader and REA agree and understand that the Team Leader is totally responsible for the timely reporting and payment of all income taxes and other governmental liabilities resulting from the performance of his or her services hereunder, which responsibility is not borne nor shared by REA in any manner whatsoever.
9. Team Leader agrees that for the duration of this agreement, any and all listings of property, and all activities in connection with the real estate business shall be taken in the name of REA. Team Leader shall file such listings with REA within twenty-four (24) hours after receipt of same. All listings shall be and remain the separate and exclusive property of the REA.
10. Either party may terminate this contract, or the association created thereby, at any time upon written notice given to the other. REA may also renew and/or modify this agreement at any time before the termination date.
11. When this agreement has terminated for any reason, the REA shall retain any listings which Team Leader has obtained, and which are still in effect at the time of his/her termination. If Team Leader has transactions pending that require further work normally rendered by Team Leader, REA may perform the work required. There shall be a deduction from the Team Leaders normal share of the commission for this service in an amount determined byPage 3 of 5 REA Independent Contractors Agreement TL 10262012-1
j. There will be a $100 contract admin fee taken off the top of each sale transaction, $50 if the collected commission is $1,000 or less.
k. There will be a charge of $19.00 per month charge for an email address along with Lead Management System (LMS) usage. This $228.00 annual charge will be taken out of the first closing.
l. There will be a one-time charge of $300.00 for real estate auction training. This fee will be paid upon the signing of the ICA agreement. You will be learning confidential and proprietary information on our systems and on the auctioning of real estate, causing this fee to non-refundable, whether one session has been taken or all ten training sessions.
m. Upon reaching $20 million in closed sales with RealEstateAuctions.com, Team Leader will be given shares in the company. The Team Leader will share in a pool of 3.42% of the shares in RealEstateAuctions.com. The team leader will have one of the 342 shares that will be divided equally between all the Team Leaders. The Team Leader will become a member in a 342 member LLC that will own these shares. In addition to closing $20 million in sales volume to be a member of this LLC with an ownership interest, Team Leader must not leave the company. Upon resigning or being dismissed, the shares would automatically go back to RealEstateAuctions.com.
7. In no case shall REA be personally liable to Team Leader for any commission not collected, nor shall Team Leader be personally liable to REA for any commission not collected.
8. This agreement does not constitute a hiring by either party. The parties hereto are and shall remain independent contractors bound by the provisions hereof. Nothing herein shall be construed so as to create an employer/employee relationship between REA and Team Leader. Team Leader shall be solely responsible for the payment of all State and Federal Taxes incurred as a result of any commissions paid hereunder. It is also agreed and understood between Team Leader and REA that REA will not withhold or pay on behalf of the Team Leader or REA any amount relating to federal, state and local income tax, unemployment compensation, workers compensation or any other employer liability or responsibility. Team Leader and REA agree and understand that the Team Leader is totally responsible for the timely reporting and payment of all income taxes and other governmental liabilities resulting from the performance of his or her services hereunder, which responsibility is not borne nor shared by REA in any manner whatsoever.
9. Team Leader agrees that for the duration of this agreement, any and all listings of property, and all activities in connection with the real estate business shall be taken in the name of REA. Team Leader shall file such listings with REA within twenty-four (24) hours after receipt of same. All listings shall be and remain the separate and exclusive property of the REA.
10. Either party may terminate this contract, or the association created thereby, at any time upon written notice given to the other. REA may also renew and/or modify this agreement at any time before the termination date.
11. When this agreement has terminated for any reason, the REA shall retain any listings which Team Leader has obtained, and which are still in effect at the time of his/her termination. If Team Leader has transactions pending that require further work normally rendered by Team Leader, REA may perform the work required. There shall be a deduction from the Team Leaders normal share of the commission for this service in an amount ... Continued...