I'm a newbie, never done a single deal..I met an investor in one of the REI meetings and he was looking for a lender. He told me if I could get him someone to fund his deals, he would give me a "marketing consulting referral" fee.
Now I have found a lender but I not sure how "marketing consulting referral" fee is set.
Do I ask for a %ege or is it a set figure that we both agree on? And what's fair? Plz help..
@Maha Mikhail I don't think there is a standard fee for that. I am also not sure how it works in TN. For Realtor's that would be part of their job to help find clients good lenders and you earn a commission off the closed sale. If you are not a realtor, may be a 3-5% is fair to ask?!?! We also call it a "Finders Fee" which works for properties or lenders and it is roughly about 3-5% of the loan borrowed; 3% being the standard mark.
Sorry I didn't really answer your question but hope it helped a little.
A finders fee is any amount that is negotiated between the parties. You should have your fee agreement in writing with all the contingencies and amounts agreed upon - otherwise disputes, disagreements and disappointments are inevitable.
Connecting lenders with borrowers for a fee may be considered "mortgage brokering". Be sure you're not running afoul of state laws regarding being a mortgage broker. What you call the fee is irrelevant. And the odds of getting caught may be low, if everything goes OK. But if things go sideways, the lender may start looking for someone to sue.
Jon Holdman, Flying Phoenix LLC
Thanks guys for the advice, I have contact the investor and their fee is $1000 for a deal that closes. @Jon Holdman is there another way of doing it? how can I avoid getting in trouble?
@Don Konipol is there a specific form to use or should I just write a draft myself? would that Cover me from any legal action??
@Parish Pradhan you sure did help thanks a bunch.
I doubt it. There's a legal principal that an act speaks for itself. You brought a borrower and lender together and collected a fee. That's brokering.
Wholesalers do the same sort of thing, but use techniques like assigning contracts or double closings so they are a principal to the transaction. That's not really feasible with lending. I'm sure this happens all the time and few people get caught. There is probably some state agency for licensing mortgage brokers. You could give them a call and discuss what you're tying to do and get their take on it.
Do keep in mind that you may think of this as hooking two people up and then you're completely out of the deal. But the lender is going to remember you if anything goes wrong. When you "find a lender" you pitched them the deal and then brought them to the borrower. In the borrower's mind this may be your deal until its done. You personally should be very confident the borrower is legit. A broker would be the one to get a mortgage application, check credit, do background checks, verify bank accounts and assets and all sorts of "underwriting" steps. I suspect you're not doing much, if any, of that. If this does turn out to be a scam of some sort, or even just a bad deal, then the borrower may well come after you.
Jon Holdman, Flying Phoenix LLC
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