percentage

16 Replies


HI GUYS HOW MUCH IS A RESPECTABLE PERCENTAGE OFF A WHOLESALING DEAL

FOR A REAL ESTATE AGENT WHO,S WALKING ME THROUGH THE WHOLESALING PROCESS /MAKING SURE THE LANGUAGE IN CONTRACTS ARE RIGHT,BASICALLY MENTORING ME

I am assuming you are an unlicensed person. Many states (CA is an exception) do not allow a compensation plan like you propose. I'd be surprised if a licensed broker would accept payment for "...making sure the language in contracts are (Sic) right..." since this is explicitly not a brokerage function, but would constitute a function considered 'practicing law'.  

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Originally posted by @Chet Hingle:

J Scott. 100% ??? Can you explain that?

If I were a new real estate investor and someone agreed to mentor me and help me become successful in this business, the very least I could do would be to give them the profits from the deals they mentored me through.  Seems obvious to me...

I would respectfully disagree with @J Scott here (I never thought I would ever on any point). I do understand the value of education, but 100% seems a little high, IMO.

If you are bringing a lead and the other person is walking you through the deal, generally you see people doing a 50/50 split as a fair split.

What are the numbers on the deal. If you are only going to be making very small amount like $500, then I would just give the majority amount to the other person.

Like Larry I'm curious of a fair compensation for a mentor. In my current search for a coach/mentor I've seen prices and terms all over the place. I'd find it hard to believe that paying 100% of the profit to a mentor is fair but since I'm new I won't doubt anything. I can't see paying it, but if you can demand that arrangement, more power to you.

I would suggest, if you do such a deal, that you don't leave a paper trail. Any paper trail.

If something goes wrong, the licensed broker will certainly be a target. Full disclosure: I'm not licensed. If I were, I'd stick to listing compensation and not "mentor" compensation (or bluntly: assisting an unlicensed person in brokerage activity and receiving compensation without any listing agreement.)

100% seems reasonable for the first time through, given the risk for the broker.

Originally posted by @Chet Hingle:

I can't believe my eyes what I'm reading that a trainer, mentor, coach would think 100% of the deal is fair. Simply unbelievable !  

Read the original post. What's unbelievable is a licensed broker will risk their livelihood in a deal like this. If/when the broker loses their license, 1000% will be too low. Licensed brokers aren't supposed to walk around with unlicensed people showing them deals and giving legal advice, then sending the unlicensed people out to make deals... then collecting "referral fees" and "trainer, mentor, coach" fees of any kind. If a state's real estate commission knew this was going on, I'd bet the broker would be a star in the Disciplinary Action pages of the monthly REC newsletter.

BTW, I'm unlicensed.

Originally posted by @Chet Hingle:

I can't believe my eyes what I'm reading that a trainer, mentor, coach would think 100% of the deal is fair. Simply unbelievable !  

Actually, I'm not a "trainer, mentor, coach," so perhaps that's the disconnect.  I'm just some guy who -- if and when someone were to teach me a trade that would allow me to generate income for life -- would give as much as I could in return during the time of that teaching. 

And I'm not sure why that's so unbelievable.  I have people all the time asking if they can come volunteer their time to my business in return for my teaching them.  That's equivalent to giving up 100% of their profits in return for knowledge.  

Is THAT unbelievable?  How is it different?

Btw, when I do mentor, I ask nothing in return.  I'm just saying what I'd be prepared to (very happily) offer if I were the one being mentored.

One last thing to think about -- if someone is mentoring you, they are essentially teaching you how to compete with them and take money out of their own pocket.  What is the value of that?

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Originally posted by @Chet Hingle:

Good luck J Scott. Good night. 

Perhaps I'm inferring tone incorrectly, but I take it you still disagree...

Here are some examples that support my viewpoint:

-  In many industries, you "intern" before you get a paid position.  The point of the internship is for you to learn the business from someone else who has been successful.  During the period that you're interning, the successful person is making 100% of the profits from your work.

-  I own a technology company and have a board of advisors.  They are essentially my "mentors," and in return for their service to my business, they get equity in the form of restricted stock.  The value of the equity is much more than the revenue/profit from the first set of deals the business has closed.  In other words, my partner and I have given up essentially all our initial profits (and more) to our "mentors."

-  I have mentored several other RE investors.  Each of them has many deals during and since our mentorship.  With the exception of one, each of them has provided me value far in excess of the profit they generated on their first couple deals.  Perhaps not handing me any of their direct profits (though they have offered), but in ways even more valuable.  Each of them has provided six-figure value to my business (and personal life) over the years -- which is certainly more than the profit from their first few deals.

Perhaps my liberal viewpoint on generosity towards those who help me isn't the norm, but I won't apologize for that -- I've had two mentors in my business life, and they are responsible for the fact that I am where I am today.  That is worth much, much more than the profit from a few deals here and there.

J Scott, we are not talking about running to Starbucks get you coffee for free.  We talking about sharing the work load in a real estate transaction. I think it unfair for you to make a comparison. Can I think of situations that warrant doing something for FREE? Of course. This is not one of them. 

So sure, if I were to hang with you on your work day and go to the car to get a pencil, sure take a 100% of the profit. 

Originally posted by @Chet Hingle:

J Scott, we are not talking about running to Starbucks get you coffee for free.  We talking about sharing the work load in a real estate transaction. I think it unfair for you to make a comparison. Can I think of situations that warrant doing something for FREE? Of course. This is not one of them. 

So sure, if I were to hang with you on your work day and go to the car to get a pencil, sure take a 100% of the profit. 

I can't speak for others, but if I were mentoring you, I wouldn't waste your time having you run errands...I'd be teaching you how to flip 20, 30 or 50 houses per year...most people know how to get a pencil or drive to Starbucks without my tutelage...if they don't, I'm pretty sure I won't be able to teach them that stuff...  :-)