Transactional Funding

[Alaki T.]

Why or why not?

I have very good deals from my agent that i have end buyers for and i have been thinking about transaction funding all week. Anyone have experience doing this?  What was your experience like? Pros and cons?

[Shari Peterson]

@Shannon Wright  is right -- you don't want to use Transactional Funding if your deal has a smaller spread than is typically considered an "acceptable" assignment fee.  How much is acceptable? Generally, I'd say $5,000 - $10,000 per deal. If you start getting much higher than that, then many times the end buyer will balk at that high of a spread and either walk away or demand that you lower the assignment fee.

That being said, there are those who have experienced the opposite -- their end buyer doesn't care how much of a profit spread there is, as long as the deal is still good for them.

Unless you know for a fact that your end buyer doesn't care how much spread there is, the prudent thing would be to close with TF. Once you've established your buyers list and know who cares and who doesn't, you can avoid TF fees and just assign those deals where the end buyer doesn't care.