Does the service fee follow the deal or follow the client when the client walks

Question

Started sourcing for a guy in Phoenix, Maricopa County, specific zip codes, 85033 and 85031, single family under $280k, ARV spread of at least 30%. Had a fee structure in place, $4,500 per closed deal. Spent about six weeks building relationships with two probate attorneys and a property manager who feeds me pre-market stuff. Got comfortable with the pipeline. Then the client pivoted, said he was shifting capital to multifamily in Tucson, still wanted me working for him but on a different product type in a different market. No conversation about whether the $4,500 still made sense on a $600k fourplex. He assumed the fee carried over. I assumed we'd renegotiate. Neither of us said it out loud and we lost three weeks on a deal that almost closed before we figured out we had completely different numbers in our heads. What I should have had in the agreement from the start was a clause that tied the fee structure to the deal type and geography, not just to the relationship. If the buy box moves more than one product type or more than one county away from what we originally scoped, we treat it as a new engagement. I have that language now but I wrote it in November after the Tucson thing fell apart. The sourcing relationships I built in west Phoenix are not transferable and the time I spent building them should have had a geographic and product boundary in the original document.

gio_marchetti5 · Answer

The three weeks of miscommunication is the part that really stings because that's not just lost time, that's a deal that nearly closed and didn't. The clause you landed on is the right one but I'd go one level deeper: tie the fee to the effort profile, not just the geography and product type. A $4,500 fee made sense on a sub-$280k SFR because your relationship overhead per deal was probably under ten hours once the pipeline was warm. A $600k fourplex in Tucson is a completely different sourcing load, different attorney relationships, different holding-cost math for your buyer, and realistically you're looking at 60 to 90 days to build anything comparable to what you had in 85033. I had something adjacent happen with a client in the East Valley in 2022, not a pivot that dramatic but a quiet scope creep from SFR to small multifamily, and the number that got assumed was embarrassingly far from the number I had in my head. The thing nobody mentions until it bites them is that the client's assumption almost always anchors lower than yours because they're thinking about what they paid before, and you're thinking about what you're about to do.

Does the service fee follow the deal or follow the client when the client walks

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