Determining a finders fee

3 Replies

I am trying to determine a finders fee amout. I've read post where people say $500-$1,000 but that seems to be for single family houses and for the finder to just find the deal, not broker it per say.

The deal.

It is a 32 unit apartment complex 3 buildings. Low occupancy, needs fixing up.

I have gotten the current owners to agree to owner financing, $300k 10% down and 3% interest with a 30 year amortization. They want a balloon payment at 7 years but trying to get it to 10 years to give the buyer time to get the units fixed up and rented and time to get the loan paid down.

I originally started looking at the deal for myself but the capital needed for improvements is a huge issue for me, also I live quite a far distance away so that runs into an issue with the rehab and looking after them. 

I'm just trying to determine what would be a fair amount for a finders fee. Realtor fees are 6%, would that be fair? Or would it be a little more since terms are more favorable than a commercial lender(lower interest rate and lower down payment). Or is that asking to much?I have not set up a deal before so I thought I would get the opinion of people from here.


@Jared Reutter   Well first of all I would stop calling it a finders fee as that is illegal to collect. If you have the property under contract you can assign your contract and you would collect an assignment fee. Otherwise you are likely acting as a broker without a license and that is illegal.

Generally the fee is dependent on how good a deal it is. Lets assume an investor feels a property is worth $100K as is and is willing to pay that much for it.  If you have it under contract for $99K you would get a $1K assignment fee. If you had it under contract for $80K you wold get a $20K assignment fee. 

So do you know how to evaluate deals, and know what investors are likely to pay for a deal like this? If not check out some of the resources here under the learn and analyze tabs above and do a search on analyzing deals.

What @Ned Carey   said, about your knowledge of evaluating deals. From your post, it read as if you are talking about being a "bird dog" for other Wholesalers, in which case, what Ned said again regarding such arrangements. In those circumstances, the dollar/percentage amount would be whatever amount you can negotiate with your Wholesaler, who in turn will take into account how much meat is left on the bone for them, because they of course still have to leave plenty on meat on the bone for THEIR Buyer (and so on). But if you ARE the one getting the Contract, then: what Ned Said. Cheers...

Hello saw your answer on a forum question regarding finders fees in california.but need clarification, I am new to Real Estate Wholesaling, I am getting a lot of request to do a joint ventures. And I am confused on what types of simple documents need to be submitted to whom and singned by what party in order to get paid? a lot of the more experienced sellers just say they have a trust with their JV's and dont sign anything - this isnt any help. all my contacts are fairly new. Also, I just decided to request a finders fee for a person who is already on a JV because I do not wish to be a 4th party in an assignment contract - seems complicated. Ive googled finders fee agreements but they seem to complex. Does this agreement go to escrow? does it need to be legaly notarized? if so Does the copy that goes to escrow have to be wet print? Or does this contract stay between her and i and is she responsible for payment? is there a need for legal jargon on these or can I type one up myself with stipulations and or a bullet agreement based on what I am asking? can I split her assignment fee since I am doing most of the marketing? say she's getting 5k I get 2.5k. Sorry, so many questions,. Im clearly new to this. Anything helps, THANKS in advanced.

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