Should a land flipper's service provider get paid per parcel or on the back end?
I'm pricing a service for rural land flippers and the fee structure is the entire question, so I want to hear how operators would rather be billed.
The work is the unglamorous middle of a deal. Pulling the deed chain, confirming legal access against the tax map, checking whether a road is county maintained or private, flagging heirship, checking for recorded easements and old mineral reservations, and writing it into a two page memo an operator can decide from.
Two ways to charge.
Flat per parcel, say $250 to $400 depending on county difficulty. Operator pays whether the answer is buy or walk. Clean incentive for me to write an honest memo, because a walk memo pays the same as a buy memo. Operators tell me they hate paying for no. On a mail campaign where 30 parcels get looked at and 3 get bought, that's $9,000 in memos against 3 acquisitions, and the memo cost per acquisition looks awful even though the walks are what saved them.
Back end, a fixed fee at closing or a small piece of the resale, nothing if the deal dies. Operator's cash isn't out on the walks. But now I get paid for yes and not for no, and my memo on a marginal parcel is worth less because everybody in the room knows what I'm rooting for. There's also the question of whether a percentage of resale on land starts looking like something that needs a license in some states, which differs by state and is a question for an attorney before I'd offer it.
A third option some people push is retainer, a monthly number for unlimited parcels in a defined set of counties. Predictable for both sides. Rewards me for going fast and thin.
Operators here who'd actually buy this, which one gets your money?
How should a rural land diligence service charge?
32 votes