My client's fund says my sourcing fee has to come from their closing costs, not from the seller side, and I don't know how to structure that
Been working with a private equity group out of Austin on a sourcing arrangement, single-family value-add in the DFW suburbs, $180k to $280k range. We agreed on a $6,500 per-closed-deal fee, and I have two properties under contract right now, one in Mesquite and one in Garland. The problem came up when their attorney reviewed the HUD on the Mesquite deal and said the fee has to appear as a buyer-side closing cost paid by the fund, not as a credit or concession from the seller's proceeds. Their position is that if it touches the seller side it creates a disclosure problem with their LP agreements. My fee on similar deals with other clients has always come out of the assignment spread or as a seller-side line item, so this is the first time I've had to think about where exactly the money sits on the settlement statement. The title company in Mesquite said they can put it on the buyer side as an "acquisition consulting fee" but they want something signed between me and the fund that spells out the service, and right now all I have is a two-paragraph email chain. Closing on the Mesquite deal is set for the 14th. The fund's attorney is slow and my contact at the fund keeps saying it'll get sorted, which is not the same as it being sorted.