Hey guys,
I have this package of 4 properties with tenants in place that will sell for 45% LTV. I got news of the deal from another real estate professional who is trying to sell the deal for a customer of his(the original seller). I passed the deal on to another investor friend of mine that has an interested buyer. The original seller wants $130k. I told my contact that his buyer could get the deal for $150k (end buyer needed only 70% LTV). I think my investor friend with the end buyer added another $5k or so for himself. The real estate professional that sent me the deal said he would allow me only 1 point ( $1,300)for a “finder’s fee”.
I feel like if everyone in the deal receives what they want, then why should it be an issue on how much I make. Original seller gets their $130k, the guy that sent me the deal helps his customer and gets his cut, I get my cut ($20K !), my investor friend got his cut, and the end-buyer is estatic that he got a “turn-key” cashflowing package of real estate under 60% LTV.
My question is what would be the best way to structure a deal like this to secure my interest in the deal? Has anyone ever used an invoice signed by either the seller or buyer(whomever is paying the “finder’s fee”) and sent to the title company?
Tell the realtor to go screw himself.
pardon my language all, but I’m a mortgage broker as well and realtors are always stepping in where they don’t belong. Ask the realtor how much he’s making and if it is only 1%…
And you are right, if the clients are happy and satisfied and you’re not pulling one over on them…then charge whatever you feel your worth.
Damn you got a deal for 45% LTV and didn’t take it yourself or find a buyer yourself?
From my experience, it is a landmine field to be going in there expecting to get paid 20K for bringing a buyer and then the realtor is sitting there only making what, 5% commission = 7750$.
The realtor will screw this up if you don’t reduce what you are looking to get. Sure you played the game and set it up well enough to get paid, but the realtor is in the way and you gotta deal with him.
I think the best thing you could have done was just write a contract to purchase the property yourself and assign the contract over to another buyer. That way you get protected and worse case scenario you just buy the properties at 45% LTV and sell it at 70-75% LTV and pocket say 20% after all the expenses and everything are over with.
The real estate professional that sent the deal to me is not a realtor, just another wholesaler. I figured the price he quoted me was including his fee/commision. I would buy the deal myself but the seller needs $5,000 earnest money, and my money is highly leveraged in other investments at the time. Without the cash I can’t put it under contract and assign the deal…wonder if a double closing could be an option? Thanks for the feedback, any more advise out there?
So basically you are in a position where you will get cut out now? you have no contract in place to protect you.
the only problem here is the realtor getting upset your making more than him, rather then gettting nothing, split or 60/40 (him less)
And yes, next time close and keep or sell yourself…
I think the agent is out of line but you arfe too. If all you are doing is refering a deal to another person who has a buyer - you deserve a finder’s fee - $500-$2000 depending on the circumstances.
Now, if you tied up the property with an option, or with an assignable contract that you sold or assigned to the ultimate buyer, you put yourself at some risk and because you would have been smart you would have been deserving of a decent profit for doing that. Then $5000-$10000 or even more would have been well deserved.
You want wholesale money when you are birddogging. the agent doesn’t like the fact you want to receive wholesaling money for birddogging. True, not his business, but he is right on some level. Don’t complicate the deal more than it already is. Accept the money and go onto the next one.
Thanks for the insights guys. I’ll just take what I can get and move on to the next deal. I figured it was worth a try, I don’t want to be greedy or immoral, I just figured “a closed mouth don’t get feed”. Still trying to figure out a way to put it under contract myself.
Read the articles about doing assignable contracts. it might be worthwhile buying one of the courses on wholesaling, that covers this approach in more detail.
Basically, all you really do is put in an offer with “and/or assigns” after your name. That allows you to assign (sell) your rights to purchase the property to another party. Generally, when you find an end buyer, you execute an assignment granting the buyer your rights to complete the contract. normally you get a fee when the assignment is signed - $1k or what you can get, with the remainder coming on closing - $3k, $5k, $10k, whatever your rights to the property are worth and still making it a good deal for the buyer.
Good luck
There can never be TOO much profit!