Taking 25 percent of an assignment fee on a closing statement the referrer never sees

A scenario worth working through, because it is the position a lot of list builders end up in. Say someone has been building a texting and skip trace list for about seven months, spending $640 a month on data and sending, and getting around 9 real seller conversations a week out of it. No contracts yet. They keep getting to price and stalling because there is no buyer to sanity check the number against. Three operators in a local group offer two arrangements. First, the list builder hands over the seller contact and steps out, and gets 25% of the assignment fee if it closes. Second, the list builder takes the appointment and signs the contract in their own name, one of the operators does dispo, and the split is 40%. If the operators' last six assignments averaged $7,900, then 25% is roughly $1,975 on a closing, and the list builder needs about four a year just to cover the data spend. The operators say the lead volume supports one closing every six to eight weeks, which the list builder has no way to verify. The hard question is how anyone gets paid on a deal they are not a party to. On the 25% version the referrer is not on the contract, does not get a copy of the settlement statement, and only knows the fee because the operators report it. The usual reply, "we've never had an issue," is not an answer. The 40% version fixes the visibility problem and puts the referrer on the contract, which also puts their name on whatever happens if the seller gets unhappy. Anyone in that position should have an attorney in their state walk them through what signing in their own name actually exposes them to before doing it. So for the room: is 25% for the whole top of funnel low, and is there a normal way people prove the fee amount to a referrer?

devon_pierce SS4APRO 15

Answer

aliyah_bActivePRO

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.

aliyah_bActivePRO

2 replies

bmoreno23ActivePRO

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%.

-1

bmoreno23ActivePRO

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