In transactional funding, committed funds are not received funds, so what is the flat fee actually pricing
The pitch for transactional funding rests on the end buyer's money being committed before the advance goes out. Committed is not the same as received. If that final wire does not land, the funder ends up owning a house at the A to B price while holding a note from a wholesaler with no meaningful balance sheet behind it, and carrying it for however long the applicable state process takes to unwind. That means the underwriting work is functionally the same as any hard money loan against the collateral, while the fee is often priced as though the funder took on only a few hours of risk. Whether the market actually sizes the flat fee to that tail risk, or prices it as a convenience service fee and simply absorbs the occasional disaster across a larger book, is the real question. A funder doing meaningful volume can price a flat fee below the true tail risk on any single deal and still come out ahead across the portfolio; a funder doing occasional one off deals cannot rely on that averaging.
