What to pay for a finders fee?

Question

Can someone advise what to compensate someone for advising us of a seller who wants to sell two properties off market? They are very good deals and we plan to submit an offer. If accepted, how should we compensate the origin of the lead?

Account Closed · Answer

While this has not happened to me, just generally thinking you probably want to have some criteria.  If a realtor provided you with the lead, then I would provide then with a flat fee of $50-$100 just for providing you the lead.  This would have to meet predetermined criteria that you set though, because you don't want them to send you everything under the sun that is a crap deal.  If you happen to close on the deal, then you could provide an additional bonus of some kind.

The important thing is, if you anticipate this trend continuing, I think you would want to 1) make sure the deals meet your set of criteria to consider, and 2) and incentive structure to encourage future deals to be sent to you, but a higher incentive for when a deal closes.

Hai Loc · Answer

Depends on how much meat is on the bone. If there is more than you can chew you can ask for a premium. If you find an awesome deal you should be compensated for it. As long as you can justify the price which is always questionable when there are inexperienced wholesalers trying to make a quick buck

Lassy G. · Answer

@Margaret Buonora. It is nice that you already had a fee in mind. $3000 is very generous. A good friend will be happy with anything. As far as I am concerned 1% to show your gratitude in this case will be more than enough. But you decide what you do. It's up to you. Please keep me updated. I am curious.

Margaret Buoncora · Answer

@Lassy Gnini Thank you for your advice. It is a friend and I was thinking 2% of the purchase price on $150,000 so $3000 for the fee. What do you think?

Lassy G. · Answer

@Margaret Buonora. This is not any easy question to answer and realy depend if it is someone you know like a friend or a family member. Most of the time a friend or family member do this just because they want to help you. You can give them whatever you like. But be careful not to hurt they feelings. As you said: the deals are really good. So be generous. Give them something they really like and will enjoy having or doing.