Referral Fees: How Much ? - Posted by Ed Swartz

Posted by William, Columbus, OH on June 04, 2000 at 23:31:53:

Ed: That is negotiable. Some pay 1% of what they earn and others figure it differently. Why not just ask the person what they have in mind? Then if it is reasonable you can agree, if not, offer something you can agree to. I was recently offered 1/2 of 1% for helping a Realtor find a building for their client. The amount was $5,511.24 due to the selling price of the building.
There is no set fee/amount, okay? I might mention that some mortgage people want to work deals for 2nd’s on “D” quality payors and you will have trouble finding a national investor that will buy those. Hopefully your contact has better quality 2nd’s to offer for sale. If you find a buyer for his notes you will be helping him, also. May you be happy & well.

Referral Fees: How Much ? - Posted by Ed Swartz

Posted by Ed Swartz on June 04, 2000 at 10:22:07:

I recently received a reply to one of my postings on the Internet about buying notes, etc… The response was:

“I originate mortgages and see a lot of 2nds for my investors How can I sell them to you and we both make $$?”

Clearly, this guy wants a referral fee. I did a search of the archives and came up with several discussions related to this topic, but didn’t find anything which discussed specific percentages. Any suggestions on what are appropriate percentages for referral fees ?

Ed Swartz

Re: Referral Fees: How Much ? - Posted by Ed Swartz

Posted by Ed Swartz on June 06, 2000 at 08:45:31:

I had a good chat with the fellow who responded to my post. Turns out he’s a finance broker putting together financing for buyers of commercial property. Occasionally, the sellers will take back a 2nd to make the deal work. He wanted to network with someone who could purchase those seconds. When we got around to referral fees he stated that he always pays 10% of what he earns in fees. It seemed to me to be appropriate to have a reciprical arrangement so we agreed on 10%.

Well the conversation went on for a bit and I mentioned I was looking for business notes. He gave me the name of a business broker. I contacted the B. broker and discovered he was in the middle of a $150K deal and $456K deal. We’ll see what happens with those leads…

One interesting point: The financing broker indicated he had made contact in the past with another note broker about some deals. Apparently, the other note broker never returned his phone calls. Obviously, the note broker never closed any deals. As I’ve heard “showing up is 99% of the game”.