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Old 06-12-2016, 01:52 PM
Acorn
 
Join Date: Feb 2011
Location: Sedona, Arizona
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jleslie is on a distinguished road
designer gets sales commission or is it a kickback?

I once worked for a subdivision home builder who had a showroom with numerous vendors - flooring, cabinets, etc and landscape and pool company. The buyers were not obligated to use the "in house preferred" vendors to upgrade the cost of the home, but if they did, they could wrap the costs into the mortgage that the home builder also offered. Each "preferred" vendor had to mark up their costs to the buyer by 10% and then the builder would skim that off the top of the amount financed or make the preferred vendor pay them directly if the contract was paid out of pocket directly by the buyer.

I worked as a landscape designer/sales person for the preferred landscape company and we had to tack on 10% for the builder regardless of whether the contract was included in the mortgage.

On an old thread, the issue of a landscape designer requesting a "kickback" from a referred contractor was considered unethical. Yet some contractors who employ salespeople like a larger pool company pays their sales people 5-10%. So why is it unethical if I am designing a project with a pool and ask the pool guy to give me say 5% for essentially acting as the sales person and hand delivering a new contract?

I think a kickback is a form of bribe or quid pro quo where two parties are colluding to form an agreement to "help each other" where a third party is involved i.e. Olympics - head of the Olympic organization committee gets bribe (kickback) from the City who is "awarded" the contract to host the Olympics. Or, a politician is given money in an off shore account to vote on a certain bill.

Are there specific laws that make it illegal for a designer - contractor relationship that do not disclose any arrangements for compensation for referrals or sales or kickbacks or what ever you want to call it?
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Old 06-12-2016, 07:48 PM
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agla is just really nice agla is just really nice agla is just really nice agla is just really nice
If you are working for the home owner taking competitive bids for a project you are supposedly being paid to act in their best interest. If a contractor is going to pay you to get them the job, you are not acting in the best interest of your client. It is a different story if you are not working for the client in that capacity.

There is nothing wrong with you taking a commission to refer work to a contractor if you are not either being paid to process the bids or passing along proprietary information to give the bidder that is paying you an unfair advantage over other bidders.

Anything and everything is ethical if you inform your client in writing on how you will be paid ahead of time and they are cool with it.

You can absolutely be paid a commission as a designer employee for a contractor without informing anyone as long as you are not pretending to be an independent designer.
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Old 06-13-2016, 05:10 AM
Acorn
 
Join Date: May 2016
USDA Zone 4
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plant-the-seed is on a distinguished road
I wouldn't call it a kickback. Maybe a finder's fee? I have dealt with builders that have required us to mark our contracts up 15%. The bad thing is there is no guarantee you are getting the project and if/when the homeowner receives competitive bids your out! We have gotten away from that practice. I do not personally mark up or have other contractors mark up their contracts for my work. Some companies do and they expedite the project. For example if we are installing an outdoor living area that requires a pergola, electrician and plumber to install gas lines which we do not do I receive allowances from the individual contractors. These are contractors I have a business reputation with and are dependable and professional. I then get the homeowner and contractor in contact with each other to discuss details and sign contracts with one another. I contact each contractor when need to meet and coordinate wen they come in and perform their work. I have tried subcontracting. However we do larger projects and I have learned a client's budget includes everything not just my contract. I make my money on my end and the other contractors make theirs. The client is happy so I am happy. Marking a contractor up 10% and having to deal with potential problems wastes my time and takes me away from designing and selling my work. To me it is not worth it to warranty and deal with a contractor's work. Let's say you subcontract $10,000.00 worth of concrete work and it fails. It is on YOUR contract, YOUR client is unhappy and now YOU have to deal with the contractor. waste of time and $$$$.
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Old 06-13-2016, 11:07 AM
Acorn
 
Join Date: Feb 2011
Location: Sedona, Arizona
USDA Zone 7
Posts: 14
jleslie is on a distinguished road
Here's the difference - this finders fee, kickback, commission, etc. is dependent on whether you are primarily acting as the designer with little to no involvement in the construction. Whereas, what if the designer also happens to be the contractor who offers a "full service" operation. A general contractor must still sub out elements such as gaslines and pools, but if they are under the primary contract, the GC adds a "mark up" as standard practice which they should since they are assuming liability as well as the sub. But if the pool builder is not a sub who is positioned by the GC/designer to get the job and contract direct with the owner, why not take a "mark up" in the form of a kickback or commission from the pool builder?. After all, you are providing full service and not getting bids on behalf of the owner.

As a design-build operation, I often go from providing the design (for a separate fee) to providing a proposal to do the work. And doing the work sometimes involves bringing in a pool builder since I am not licensed to build pools, nor do I want it under my contract. I am providing the "team" as part of a package - that is to implement my design and maintain the integrity of the design and be on the job in case of design tweaks are needed. I don't want another contractor chosen by the owner to come in and build part of my design.
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Old 06-13-2016, 06:18 PM
Acorn
 
Join Date: May 2016
USDA Zone 4
Posts: 38
plant-the-seed is on a distinguished road
If you tell your client that you will be expediting the project I think that is a value to your client and worth something. One for your time and two for your client not having to spend their time on something they may or may not understand.
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