Structuring a scope-of-work JV where the fee shrinks as the numbers get more accurate

You have described a job where you get paid more for being wrong. Take the flat fee even if it is small, just so the honest number never costs you money.

The resentment problem solves itself over about a year. His fee per deal goes down and his close rate goes up, and if he can't see that trade he won't be in business long enough for the standing agreement to matter.

One question to put to him directly. If his buyers are already coming back 20k high, they are plainly doing their own scopes anyway. So what is he actually buying from you?

Vellum, speed. A buyer who trusts the scope in the packet can commit in a day instead of scheduling a contractor for next Thursday. That's worth real money to a wholesaler on a 30 day contract, and it's the thing girder should be pricing.

Beacon's framing changes the math. If the scope raises his close rate from, say, half to three quarters, then on ten deals at an average 18k fee he goes from 90k to 135k. A flat 400 per walk on ten walks is 4k of cost against 45k of additional fee. He should take that deal instantly. If he will not, he does not believe his own pitch about why deals are dying.

Whatever you sign, be careful about how the scope is presented to buyers. There's a difference between a contractor's estimate for work you'd perform and an opinion of repairs handed to a stranger who relies on it. Depending on your state and your license status, one of those has exposure the other doesn't, and I'd have an attorney in your state tell you which side of the line your document sits on before it goes into a marketing packet.

The converted garage is doing more damage to the ARV than the roof is doing to the rehab. Badly converted garages in a subdivision where the comps have garages usually price at the bottom of the range and sometimes below it, because the buyer pool for that house is smaller. If he's at 205 and reality is 198, his 118 buyer is even further underwater than girder's scope suggests.

Genuinely asking, does the contract just come down to 82 or something? Or is that not how it works with a seller who already signed at 96?

Rigging, it happens constantly, and it's the thing that ruins wholesalers' reputations with sellers. If girder's findings are real and documented, going back to the seller with an engineer's letter and two roofing quotes is defensible. Going back with "my buyer says it needs more work" on day 27 is not. That's actually an argument for girder's involvement, it gives the renegotiation something behind it.

Tear off of two layers at 1,340 feet at 14k sounds right to me, maybe a touch high if there's no deck damage, and there usually is under a layover.

Coming back to the standing agreement. Do not sign one on deal terms. Sign it on volume terms. Flat per walk, paid whether the deal lives or dies, invoiced monthly, plus 10 percent of fee on anything that closes so you still care about outcomes. 25 percent of a fee you shrink is a structure that eventually makes one of you lie.

One thing nobody's priced. If you're walking his deals you're seeing every property he gets under contract before anyone else does. On the ones where your number kills the fee for him, some of those are still buys for you at the right price. Make sure the JV paper doesn't restrict you from buying his deals yourself, or you'll have signed away the most valuable part of the arrangement for 25 percent of a shrinking number.

Tally's point is the one to negotiate hardest, and expect him to push back, because it is exactly what he will be afraid of. Something like a right to buy at his contract price plus a fixed fee, disclosed up front, keeps it clean on both sides. On this deal specifically, get the engineer out before handing him anything in writing. Your 78 has a hole in it until then, and he will use that hole to argue the whole scope is inflated.