Finders Commissions

8 Replies

Hello, 

I'm new to wholesaling and I'm familiar with assigning the contract and double closing. I was also wondering about finders commissions? How do they work? 

@Glenn Gayet you mean if you find a buyer for another wholesaler's deal?  Whatever amount you discuss with them BEFORE telling your buyer about the property

@Brie Schmidt I was building my buyers list and texting an investor. He said if he wants the property himself we could do a finders commission and if we wholesale it together we'd split it. 

@Glenn Gayet - so you would present him the deal with whatever finder's commission you want built into it.  Then he can decide if it is a good deal to him or if he can wholesale it.  Either way stay at your acquisition plus fee.

@Glenn Gayet

I agree. If someone wants to partner with you it's probably because they are having a hard time finding deals, or they want to mentor you. But I doubt mentors are coming to hunt you down. So my guess is this guy is in need of help when it comes to lead generation. My take is this, if it's your deal coming to the table, you take 75% of the total fee and pay him 25% for using his buyer and that's as high as I would go. I wouldn't commit to giving him dibs on any deal he wants. Take the acquisition fee as @Brie Schmidt suggests. If you start letting this guy pay you a bird-dog fee, you'll end up working for him for chump change and missing out on opportunities to deal with other investors that might be able to open new doors to you.

Build a buyers list, keep this guy on it, but don't just sell to him. Put your deals out there to maximize your earning potential through good ole' fashion competition.

@Benjamin Barredo I'm with you. I'm new to wholesaling to the reason I'd partner with someone is so I can bring the deal and the other person can lead me through some of the other aspects of it like putting the contract together with clauses in it that cover you if you don't find an end buyer. For my first deal or two I'd be down to partner with someone that has done it before just to be sure I do that process correctly. I bring the deal and then once we agree it's a good deal we move forward. After the first one or two I wouldn't intend to partner anymore. I will be moving into a new market come May/June so right now I am trying to be able to recognize a good deal and take some form of action that creates money. Then when I move I'm all in. 

That's a great plan @Glenn Gayet . Where are you finding potential partners? I would be wary of people you meet online or across similar channels where chance brings you together. I fooled myself into believing the universe brought us together only to learn they were about as serious as a 16 year prom queen at a football rally. If you go somewhere like a REIA meeting where people are there for networking, that's a good place. If you find the deal and do all the leg work but they guide you, offer 50% if you're comfortable with that. I'd probably do something still similar to a 75/25 split because all they are doing is talking to you, a person motivated to speak to them and doing the due diligence. Now if they end up holding your hand through the deal and negotiating terms, walking you through every step, then yes, 50/50 is a good way to go.

@Benjamin Barredo Thanks Benjamin. Your input is appreciated. Also, I am building my buyers list through networking and doing everything through leg work because I have no marketing budget. So in terms of using a title company, putting down a deposit, transaction fees, ect, I'd have to maybe have the other person take 50% of those fees from my half of the assignment fee. Trying to think of ways to navigate this.

Join the Largest Real Estate Investing Community

Basic membership is free, forever.

By signing up, you indicate that you agree to the BiggerPockets Terms & Conditions.