Someone asking for Finder's Fee after the transaction
Recently, I had an acquaintance tell me about a great deal she found from a wholesaler. She wasn't interested in it because she only wants to wholesale herself right now. She gave me the name of the wholesaler and sent me the address of the place. She said that she ran the comps and felt like it was a good deal for a flip or buy and hold.
I wasn't looking for a property at the time because I was in the middle of a flip. However, it was a good deal, so I decided to buy it. I let the acquaintance know that I bought it and thanked her for bringing it to my attention. I was planning to also write her a note and send her a Starbucks card.
BUT then, she asked me for a finder's fee of $1,000. Honestly, I was taken aback because we hadn't talked about this at any time prior to this. I didn't know that that was why she was sending me the deal. What would you do? I'm grateful that she sent it my way, but I would have liked to know about the arrangement ahead of time.
Thank you for any insight you can give me.
Sounds like a some celebration drinks and pick up the tab on dinner.
That seems like something that should have been discussed up front and I don’t think you would have to agree. On the other hand this person is into wholesaling and helped you find a deal so good you bought it when you weren’t looking so I do see value in that. If you pay the money you may get more leads but I can almost guarantee if you don’t that bridge is burnt so the real question is 1000 worth burning that bridge. I’d probably pay them for their help and let them know that this is now the agreed upon deal 1k/ closed lead and we can let it go both ways. Relationships are hard to build and I wouldn’t loose this one over 1k but I’d be frustrated.
#2 Contractors Contributor
- Severna Park, MD
I would pay it , its the cost of doing business . If not , next deal goes to someone else . Somethings dont have to be said , they are just understood .
@Adam Martin nailed it.
Legally, you are not required to pay a finder's fee at this point. However, evaluate the value of this relationship to your future business. Especially in real estate, it is a good idea to never burn bridges. This is largely a word of mouth business. You do not want it to appear to other agents that you are "stiffing" this acquaintance.
With nothing in writing and no prior discussion of it, I would not pay it. It's all about the expectation. If she had set the expectation up front that she wanted a finders fee I am sure it would not have been an issue but to come back after the fact and request it doesn't seem like good business practice to me.
#4 Wholesaling Contributor
- Wholesaler
- Austin TX
It almost feels like she sent the deal to be nice and then someone whispered in her ear that she should be charging you something since you decided to buy it. In my opinion that's bad business on her part. She should've independently decided that she wanted to be compensated. I also think 1k for forwarding an email is a bit steep and you could've easily gotten the email, purchased the property and never told this person at all. But you did things the right way and she did not. I would perhaps suggest to her that she contact the wholesaler and try to get her $1,000 fee from them since she was the one that found the buyer for the deal (you) and I would explain to this person that $1,000 for forwarding an email is too steep. Don't let this person shake you down because they realized they missed an opportunity.
Some of the replies have said that you should consider paying the money anyway to not ruin a future relationship but in reality you are the more valuable commodity in this situation. You are a solid buyer who can close. Your response to this wholesaler should be, I really appreciate you sending this deal my way. I can't justify paying you $1,000 for telling me about someone else's deal but I am willing to _____ (whatever you are actually willing to do), I'd like to buy more deals from you in the future, directly or indirectly, let's discuss a flat referral fee going forward. My guess is if she isnt closing any deals right now, something is better than nothing.
If you just pay the 1,000 she will be coming back to try to shake you down in the future. You've got to nip that behavior in the bud.
That seems like something that should have been discussed up front and I don’t think you would have to agree. On the other hand this person is into wholesaling and helped you find a deal so good you bought it when you weren’t looking so I do see value in that. If you pay the money you may get more leads but I can almost guarantee if you don’t that bridge is burnt so the real question is 1000 worth burning that bridge. I’d probably pay them for their help and let them know that this is now the agreed upon deal 1k/ closed lead and we can let it go both ways. Relationships are hard to build and I wouldn’t loose this one over 1k but I’d be frustrated.
#3 BRRRR - Buy, Rehab, Rent, Refinance, Repeat Contributor
- Investor
- Austin, TX
- 5,506
- Votes |
- 9,861
- Posts
#3 BRRRR - Buy, Rehab, Rent, Refinance, Repeat Contributor
- Investor
- Austin, TX
If she is going to be sending you more deals in the future pay it. If not, ignore her.
I do think that it was exactly as Lydia said, an afterthought and probably a suggestion from somebody else. I believe that she originally sent the deal my way because I gave her an hour of my time to help her with some questions she had about finding deals and reaching out to probate attorneys, etc.
If it has been stated up front that there was a finder's fee, I probably wouldn't have blinked, but the fact that it came along after the fact is what is jarring to me. I think she will eventually be a good wholesaler but she hasn't gotten a property under contract yet. I want to encourage her but not be held to something that wasn't agreed upon upfront. Still mulling over it...
Let her know....."hey, You shouldve discussed this with me before hand. I dont have 1k for you but i will give you 500 for everything...."
you definitely want her to bring you more deals though
@Terri Johnson I would have given her $500-$1,000 (depending on my profit) at the time of purchase.
Thanks everyone. I reached out to her and said that I would like to give her $500 as a finder's fee and that next time, let's discuss it in advance. She was thrilled and totally on board with that. :)
If it’s a great deal what’s 1000 bucks? If it was a mediocre deal, what’s $500 bucks?
Congratulations on buying a house.
#2 General Landlording & Rental Properties Contributor
- 10,088
- Votes |
- 13,316
- Posts
#2 General Landlording & Rental Properties Contributor
I would not pay it. Do what you were going to do with the card and note or take her to dinner.
@Terri Johnson
Good job - you kept the relationship, future deals, and really, what's $1000 in a year from now. Nothing.
Your "friend" was a day late, and a dollar short asking for that. Bitter taste left in my mouth for sure. And I don't know what her approach was
I think you handled it the best way you could on your end!
#4 Wholesaling Contributor
- Wholesaler
- Austin TX
Quote from @Terri Johnson:
I do think that it was exactly as Lydia said, an afterthought and probably a suggestion from somebody else. I believe that she originally sent the deal my way because I gave her an hour of my time to help her with some questions she had about finding deals and reaching out to probate attorneys, etc.
If it has been stated up front that there was a finder's fee, I probably wouldn't have blinked, but the fact that it came along after the fact is what is jarring to me. I think she will eventually be a good wholesaler but she hasn't gotten a property under contract yet. I want to encourage her but not be held to something that wasn't agreed upon upfront. Still mulling over it...
Here is the reality. Most wholesalers fail. Its hard work and not everyone is cut out for it. The fact that this person is trying to get a grand out of you and has zero experience or track record is even more evidence that they are just trying to squeeze some money out of you after the fact. I hate to say it, but its likely this person will never actually put a property under contract so you arent really burning a bridge if you decide not to pay her. I absolutely think you need to have a discussion and let her know that what she did was not OK. And I firmly believe that you should not pay her. Do not reinforce the mistaken belief that sending an investor someone else's deal is worthy of a finders fee. Especially not a $1,000 for what amounts to hitting the forward button on an email. She literally did not do any more than that. Not worth a grand. Just my 2 cents
@Terri Johnson conflict can be difficult. I think it calls for a direct conversation. Tell her that you don’t want to burn a bridge, but that the finders fee should have been discussed up front. Everyone has talked about you burning the bridge, but she is the one asking for money with no contract or expectation set up front. It also sounds like she is new and you mentored her already, so this could be a learning experience for her as well. Talk it out, find some middle ground, and set expectations for moving forward.
- Rental Property Investor
- Boston, Massachusetts (MA)
- 2,236
- Votes |
- 2,363
- Posts
@Terri Johnson tell her you could always bill her for the hour you spent at her rate 😅. Feels like you did the right thing. I’m surprised she could actually recognize a good deal. Might be useful in the future....
Quote from @Terri Johnson:
Recently, I had an acquaintance tell me about a great deal she found from a wholesaler. She wasn't interested in it because she only wants to wholesale herself right now. She gave me the name of the wholesaler and sent me the address of the place. She said that she ran the comps and felt like it was a good deal for a flip or buy and hold.
I wasn't looking for a property at the time because I was in the middle of a flip. However, it was a good deal, so I decided to buy it. I let the acquaintance know that I bought it and thanked her for bringing it to my attention. I was planning to also write her a note and send her a Starbucks card.
BUT then, she asked me for a finder's fee of $1,000. Honestly, I was taken aback because we hadn't talked about this at any time prior to this. I didn't know that that was why she was sending me the deal. What would you do? I'm grateful that she sent it my way, but I would have liked to know about the arrangement ahead of time.
Thank you for any insight you can give me.
I was about to reply that I would negotiate a lower fee & then let her know that for all future deals, expectations should be established up front, but it looks like that's exactly what you did.
-
Real Estate Agent Illinois (#475. 112189)
- 3126817487
- https://www.chicagodiscountproperties.com/
The wholesaler should pay her the $1,000 as a dispo fee.
#5 All Forums Contributor
- Lender
- The Woodlands, TX
Quote from @Terri Johnson:I’d say you handled it very well
Thanks everyone. I reached out to her and said that I would like to give her $500 as a finder's fee and that next time, let's discuss it in advance. She was thrilled and totally on board with that. :)
When you are in this business, you should already know to give a finder's fee when someone BRINGS you a deal.
She actually did work and could have given this property to anyone. She chose you for a reason. Don't ruin this contact.
Quote from @Terri Johnson:If there was no agreement for a finder's fee, then it's entirely up to you.
Recently, I had an acquaintance tell me about a great deal she found from a wholesaler. She wasn't interested in it because she only wants to wholesale herself right now. She gave me the name of the wholesaler and sent me the address of the place. She said that she ran the comps and felt like it was a good deal for a flip or buy and hold.
I wasn't looking for a property at the time because I was in the middle of a flip. However, it was a good deal, so I decided to buy it. I let the acquaintance know that I bought it and thanked her for bringing it to my attention. I was planning to also write her a note and send her a Starbucks card.
BUT then, she asked me for a finder's fee of $1,000. Honestly, I was taken aback because we hadn't talked about this at any time prior to this. I didn't know that that was why she was sending me the deal. What would you do? I'm grateful that she sent it my way, but I would have liked to know about the arrangement ahead of time.
Thank you for any insight you can give me.
-
Real Estate Agent Arizona (#SA637448000 )
- (928) 300-9449
- [email protected]
#3 General Landlording & Rental Properties Contributor
- Real Estate Consultant
- Cleveland
- 2,974
- Votes |
- 5,097
- Posts
#3 General Landlording & Rental Properties Contributor
- Real Estate Consultant
- Cleveland
Quote from @Terri Johnson:
Recently, I had an acquaintance tell me about a great deal she found from a wholesaler. She wasn't interested in it because she only wants to wholesale herself right now. She gave me the name of the wholesaler and sent me the address of the place. She said that she ran the comps and felt like it was a good deal for a flip or buy and hold.
I wasn't looking for a property at the time because I was in the middle of a flip. However, it was a good deal, so I decided to buy it. I let the acquaintance know that I bought it and thanked her for bringing it to my attention. I was planning to also write her a note and send her a Starbucks card.
BUT then, she asked me for a finder's fee of $1,000. Honestly, I was taken aback because we hadn't talked about this at any time prior to this. I didn't know that that was why she was sending me the deal. What would you do? I'm grateful that she sent it my way, but I would have liked to know about the arrangement ahead of time.
Thank you for any insight you can give me.
Give her the 1k ,, why not? Heck give her $2500, maybe she will bring you more. If $2500 hurts the deal, then it wasn't a deal to begin with :)