Finders fee

4 Replies

A broker friend brought me a 4-unit property. Valued at about 175K, with the option of making cash offer of 120k they expect to be accepted. (Basicaly buying a 175 property at 120) They are asking for a 20k finders fee. Am I correct that that is extremely high? If I recall correctly, most wholesalers typically dont ask for more than 10k. No?

@Daniel Rubenstein It depends on the deal . I have wholesaled properties with a 20k assignment before. Each deal is different and depends on the spread in the deal.

Seems high to me also. Why did you refer to your friend as THEY? anyway why are they so sure the seller will accept 55k less than the value?

Counter your friend with 10k and make the offer for 120k. If the seller doesn't take 120k and goes up to 150k, does your friend still want a finders fee?

I know this is an old post but I'm new to wholesaling and just reading up finders fee's. The group I trained with says 2-2.5% ARV is a typical finders fee.

Who knows what is high or not?  It depends on the market.  Bottom line, don't begrudge what someone else is getting.  Focus on what you are getting.  In other words, if it is a good deal for you and puts money in your pocket, then do the deal.

The bigger issue is "finder's fee".  By that, do you mean assignment fee?  If the person has simply located the property for you and has no interest in the property whatsoever (like an option) and do not hold a real estate license (which gives a person the right to represent someone else in a transaction in which that person has no interest), then that person is breaking the law if that person collects a fee (commission) on the transaction.  Moreover, you don't have to pay him or her he if or she is acting as an unlicensed agent.

If the person has a contract on the property (has an interest in it) and is assigning it to you (essentially, selling you the contract), that is different.  If you want the deal, you have to buy it from the person as that person has it encumbered.