25% of a closing statement I'm never allowed to see

Been building a texting and skip trace list for about seven months. Spending $640 a month on data and sending, and I'm getting around 9 real seller conversations a week out of it. No contracts yet. I keep getting to price and stalling because I don't have a buyer to sanity check the number against.

Three guys in a local group offered me two arrangements. First one, I hand over the seller contact and step out, and I get 25% of the assignment fee if it closes. Second one, I take the appointment and sign the contract myself in my name, one of them does dispo, and I get 40%.

Their last six assignments averaged $7,900, so at 25% I'm looking at roughly $1,975 on a closing, and I'd need about four a year just to cover the data spend. They think my lead volume supports one closing every six to eight weeks, which I have no way to verify.

What I can't work out is how I get paid on a deal I'm not a party to. On the 25% version I'm not on the contract, I don't get a copy of the settlement statement, and I only know the fee because they tell me. I asked about that and got "we've never had an issue," which is not an answer.

The 40% version fixes the visibility problem and puts me on the contract, which also puts my name on whatever happens if the seller gets unhappy. I'd want an attorney in my state to walk me through what signing in my own name actually exposes me to before I do it.

Deciding this week. Is 25% for the whole top of funnel low, and is there a normal way people prove the fee amount to a referrer?

Answer

2aliyah_bAU2APRO6

Your $640 a month is $7,680 a year, so the 25% version needs four closings a year to break even and five before you've made anything for seven months of texting. Their estimate of one every six to eight weeks would be eight or nine, which would be great, and it's also the number they have every incentive to be optimistic about. They've never run your list.

On proving the fee, the thing I've seen work is the referrer gets paid at closing by the title company on the same disbursement, off a signed fee agreement submitted to title, rather than by check from the wholesaler two weeks later. Then the settlement statement shows your line. Whether title in your state will cut that check to an unlicensed referrer is a question for the closer, and it varies, so ask the specific title company before you agree to anything.

If they won't do it through title, that tells you what the arrangement really is.

2 replies

-1bmoreno23AB1B

I stalled at the same place you did, right at price, and what got me past it wasn't more analysis. I called four cash buyers and asked what they'd pay on the last three houses I'd walked. Took two days.

If you can do that, the reason for handing over 75% of the fee shrinks a lot. Their real value to you is dispo speed and a buyer list, and you can rent a piece of that on one deal without signing up for a permanent 25%.