Wholesaler · Ocean Springs, MS · Member since 2013 · 39 posts · 6 votes
I received an email from another wholesaler in my area and he is offering to pay a referral fee to me if I find a buyer for a few houses he has under contract.
I haven't done much business with him in the past so we aren't at the level of trust I would like to be at when dealing with verbal promises of referral fees. How can I protect my referral fee should I find him a buyer that closes on his property?
Nick Saucier Whenever I JV (partner) with another wholesaler and they have a great deal and I bring in one of my buyers. I only will agree to work with them if they agree to split the wholesale profits. Some wholesalers will want you to add in your profit on the back end. I refuse to do that...
Always sign a JV contract with the other wholesaler and get a copy of A/B P/S contract. Title company will get all the contracts and insure everything is in order on closing day.
I'm on the same boat as you.. I am in the process of sending some of my buyers to someone with a deal.. Get a contract with the seller to protect your referral fee(if its legal in your state), the only problem i'm having is how to make a contract with my buyer, should he close on this deal.
Hey Nick Saucier, I'm not sure if this will help you, but here is a link for BP contracts you might find something there. Good Luck.
http://www.biggerpockets.com/files/category/contracts
You might be able to write up a bird dog and state that the service you are providing is referring a buyer. I haven't been in the business for too long but I think that would be an available option.
Nick Saucier Whenever I JV (partner) with another wholesaler and they have a great deal and I bring in one of my buyers. I only will agree to work with them if they agree to split the wholesale profits. Some wholesalers will want you to add in your profit on the back end. I refuse to do that...
Always sign a JV contract with the other wholesaler and get a copy of A/B P/S contract. Title company will get all the contracts and insure everything is in order on closing day.
Agree 100% with Ms Sally above. Use a JV agreement that spells out who gets paid what. Submit it with the contract and assignment to the title company. This way you get paid out of closing as a principle with an equitable interest.
I also agree with Sally however in some cases splitting the deal will not work. Instead I do a JV outlining what I want as a fee and get the other party to agree. Once I have the agreement I proceed to find or bring a buyer to the table.
Great advice above in regards to a JV contract. What strikes me is the wholesaler with the deal coming to you looking for your buyers. Do you have a buyer for this property or similar? I am just curious. Usually when I hear about JV deals it is the opposite. A wholesaler who has been building a buyers list reaches out to others with deals to see if they will JV their deals. I guess I would proceed with caution.