Finders fee etiquette?

11 Replies

So, I have a realtor friend from out of state I’m thinking of sending a serious motivated home buyer to. What’s the etiquette for asking for a kickback/referral fee? How would you recommend doing this if at all.  

Hi @Rodney T. , Agents are not legally allowed to split their commission with people who are not licensed.  However, for a referral that ends up closing, I usually send a token of my appreciation worth a couple hundred dollars.  

@Brad Hammond thank you. I didn’t know that. I was hoping to make some money on a deal like this but I’m not licensed, and I guess the new would be investor in me knows he’s missing out from lack of experience. I suppose I could get more creative; any suggestions?

My suggestion is you should buy it.  If your first thought is I don't have the knowledge or money, partner with someone who does.  You could wholesale it, purchase it with hard money and flip it or dust it off and keep it as a rental if it makes sense.  I think you should be looking at it from that angle and there are lots of people on BP that would love to help you. 

Seems that person you want to refer to your friend will find a realtor no matter what.  This way you are looking out for your friend and help the buyer working with a good realtor.  You just helped 2 people...and I am sure you friend will not forget.

@Brad Hammond I apologize if I didn’t get specific enough. It’s an out of state vacation rental property, the “idea of which” is appealing to the buyer; though he hasn’t looked at anything specific yet. I asked him for some criteria so I could look around, but despite having strong connections in that state: realtor, builders, investors, PM etc, I’m not sure what I can do. So he and his wife want to buy an investment property that cash flows in the next few months he has plenty of money but hasn’t settled on a place yet. I’m just trying to help him connect to some people in the area he wants to look. With that in mind what would you do?

@Rodney T. Why wouldn’t you just send a referral to your friend to be helpful to him/her? If you are only looking at relationships for what you can get out of them then you won’t get very far in real estate or business in general.

If the person is motivated then they will find a realtor regardless of your introduction. How much do you think you should really gain from sending a quick introduction email or text?

I wouldn't ask a friend to pay me for a referral. I guess we all have different beliefs of what being a friend means. I see it as friends help each other. Look at it from the flip side. If your referral turns out to be a PITA waste of time for your friend, will you pay them for their trouble? Referrals build stronger relationships. That all being said, top real estate agents will always reward people who refer them business with some type of thank you. You shouldn't need to ask. If they are not appreciative, just refer to a different friend next time.

@Joe Splitrock gives great advice, as usual. I'm in the same school of thought. Give without the expectation of receiving anything back. Doing this over many years with everyone you meet will make you the beneficiary of a tremendous amount of goodwill and wealth.

In regards to your fairness question, I've always liked to ask people:

"What do you think is fair here?"

You'd be shocked out how often the answer is fair. My experience has been +/-99% of the time.

Motivated buyers are a dime a dozen, especially if in Bellingham. 

A motivated seller would be worth something though.  I have been given gift cards (unexpectedly) but $ comp/kickbacks to unlicensed minions aren't allowed in most cases.