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Whats the difference between a "commission" and a "fee"?

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Dan Krause

Michigan

Mar 30 '10, 10:27 AM


I am refering to fee as "consulting fee" or "referal fee" . In a bird dog deal, where finder is not licensed, does asking for a consulting fee or referal fee instead of a bird dog fee make you legal enough to obtain a fee for locating a property?


Edited Jun 26 2010, 12:17


Carlton Ellis

Real Estate Consultant from Lansing, Michigan

Mar 30 '10, 11:17 AM


Originally posted by Dan Krause:
I am refering to fee as "consulting fee" or "referal fee" . In a bird dog deal, where finder is not licensed, does asking for a consulting fee or referal fee instead of a bird dog fee make you legal enough to obtain a fee for locating a property?


Don it's all about how you structure your relationship with an investor. This seems to be a VERY IMPORTANT question to you. If you want a consultant's fee when doing business then set up an AGREEMENT to work as a consult for somebody with the approriate terms and conditions. Once again it makes no difference what you call the fee your ACTIONS in a real estate transaction have to legal in the state your are doing business in. In Michigan you can't do the follwing without a real estate license:

Market the sale or purchase of a property for another person.

Negotiate the purchase or sale of a property for another person.

List a property for purchase or sale for another person.

Manage a property for another person.

If you are unsure about your legal standing in a deal then ask if you can become a partner in a joint venture agreement with an investor with the understanding that the investor in question buys you out at an agreed upon price once a transaction is completed. Now, finding a investor willing to do this may be easier said than done but it completely takes the "Is what I'm doing legal" question off the table.




Edited Jun 26 2010, 12:17 by Carlton Ellis


Dan Krause

Michigan

Mar 30 '10, 12:38 PM


Thanks Carlton. Good answer.


Edited Jun 26 2010, 12:17


Dan Krause

Michigan

Apr 04 '10, 05:39 AM


:D CARLTON: I did as you suggested and found a previous investor who would prefer to do a joint venture/partnership deal as long as the deal make sense and investor buys out my percentage. In my case this would be as opposed to getting a "bird dog" fee.Otherwise the investor would like to engage in wholesale deals and pay commissions per agreement.Is there much of a difference between the 2-JV/partnership and wholesaling? Do you know of any "do it yourself" wholesale contract samples on the BP website that a beginner could use? What would your suggestion be for an escape clause-or do i absolutely have to have my own attorney draw these up. Please let me know. Thanks, Dan


Edited Jun 26 2010, 12:20


Matthew j. T.

Real Estate Investor from Albuquerque, New Mexico

Aug 31 '11, 01:20 PM


I am following up on this. I have a deal that an investor is interested, it's a higher end house. The seller is having financial problems, and has equity. I can get it under contract for 445000, and wholesale for 500,000 house is easily worth 800-900k in the area, in good condition. Now here is my question, should I.

1. Put it under contract and "Assign"
2. Put it under contract a double close.
3. Be used as a bird-dog and refer the property to somebody else for a fee.

Here is what I am stumped on. A double close as most would say , is going to cost me 2% transactional funding probably, and ontop of that I have to pay a set of closing costs, meaning I am left with no profit, just for "Hiding my fee" . And number 1 if I assign it, everybody knows my fee, meaning the deal can fall apart.. And three. there is a guy know, that knows exactly what he wants to do , he is an experianced investor, in all shapes of investing in real estate. Basically he wants to give the seller 50k (which is the same difference the seller would walk away with after closing anyway) catch up on the payments, and take over the mortgage,I believe thats referred as a sub2 type of deal. Anyways, this guy wants to pay me a "Bird dog fee" or a "Consultant fee" I am a little unsure how to go about this deal, because consulting and birddog fee are basically getting paid for referral which I don't think is legal, and I don't want to end up in any trouble. I'm begining to think putting it under contract and assigning it is MUCH more smart and less, risk, however it's finding the buyer for this higher end type of house. Anybody have any input , please?

Matt



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