Twenty-six files, eight closings, and I got paid on two
Twenty-six files. Eight closings. Two fee splits that actually landed in my account.
The setup was supposed to be simple. I do a lot of talking to small investors in my area, and most of them arrive with a financing problem before they have a property problem. I found a broker with a real book, agreed on a referral split of 25 percent of his side, and started sending everything I touched. No paperwork on my end beyond a warm intro and a summary of the borrower's situation.
Two separate things went wrong and I only understood one of them at the time.
First, the panel. He had somewhere around fourteen lender relationships and thirteen of them were agency or agency-adjacent, plus two DSCR shops he used occasionally. What my people needed was bridge money with rehab draws, because they were buying tired houses at 70 to 75 percent of finished value. Eleven of the twenty-six files needed a rehab draw structure and he had nobody to place them with. He tried to squeeze three of them into DSCR product on as-is value and the appraisals came back where you would expect. Those files died at underwriting after the borrowers had paid for appraisals, which is the part I still feel bad about.
Second, the money. Whether an unlicensed person can be paid a fee tied to a closed mortgage loan depends on the state, and in mine a compensation arrangement contingent on a loan closing looks like broker activity. His compliance person shut it down in month five. I should have had a licensed attorney look at the arrangement before I built a pipeline on top of it. Two files that had already closed got paid. Everything after that I did for free, and I kept sending files anyway because I had told those borrowers I would.
What it cost: roughly 90 hours of my time, about $4,000 of borrower money spent on appraisals for files that were never placeable, and a fair amount of credibility with four investors who now think financing is a coin flip.
What I would do differently. Ask for the lender panel by name and product type before sending anything, and specifically ask how many bridge lenders with a draw process he has actually closed with in the last twelve months. Get the compensation question answered by counsel in writing first. And stop treating one broker as a pipeline when my borrowers need three different kinds of debt.