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Updated 7 months ago, 04/24/2024
Partnering with a friend on a deal - should he put his commission toward closing cost
Hello! A friend/former coworker of mine is partnering on buying a duplex with me. We are under contract right now. He is acting as the buyer's agent in the deal since he has his license. I have about 3 years of experience flipping and building houses, as well as an associates degree in a trade, about 2 years of drywall/paint experience, around 1 year of commercial/residential electric experience, and about 3 years of landscaping experience. I will be leading the charge on building a scope of work, (if needed) reaching out to my extensive database of subcontractors for quotes/work, making selections/choosing materials, and the main one performing most of the hands-on labor, while teaching him (who has no experience) how to do these tasks. So, basically being the project manager/GC on this deal. We will both live in one side of the duplex and rent out the other when renovated. We are having the conversation right now around what to do with his commission he will receive when we close. It is my understanding that it would be mutually beneficial for him to put all or much of his earnings towards closing costs to lower our cash out of pocket for closing. He does not understand my POV. What would you do in this situation? How would you present this to him in an understanding/resolving way? I feel like it is helpful to add that I am not looking or asking for any compensation for performing the tasks I mentioned above, as well as bringing in my knowledge/experience to benefit both of us to maximize the returns we will get in the future. This deal would not be happening if either one of us were not apart of it in the first place, so in theory, half of that commission is mine anyway, right? We are buying this as 50/50 partners. I would understand that if he was just representing me as the buyer's agent and not owning it 50/50 with me, he would be able to take 100% of that commission for himself, for providing that service. But that is not the case here. Looking for practical steps to take to maximize our partnership for the better. We both want to do this deal. Thank you!