What would you pay for a referral

[Account Closed]

Follow up on my previous forum "saga." :) I got a lead from another investor (name and phone#), found a buyer and got him to cover my realtor commission of $6,000. (3% of $200k sale price) After deducting my broker's fees I net $5,500. At the beginning I verbally offered the investor 10% of what I would be getting, or $550. He verbally agreed and seemed happy to get some money for just running some ads and answering a phone call. I worked on this deal for 2 months, jumping through hoops and getting the seller and buyer whatever they needed to close the deal, putting up with lawyer nonsense, even agreeing to kick in $300 for termite treatment which the bank requires before approving the loan. So today I got an email from my investor "friend" saying he talked to a few other investor friends (with whom I also am acquainted) and they all decided that a fair referral fee should be $1,000. I know I wouldn't have this deal without him giving me the lead, but I'm a bit miffed that he now wants more, and that brings down what I take home to $4,200 before taxes. I know I should probably be grateful to have something rather than nothing, but does this seem right? The closing is supposed to take place tomorrow. I do honor my promises but I don't appreciate last minute surprises.

I need your words of wisdom. Help me get over this sour taste in my mouth.

One thing I must do now is 1099 him because the fee would be over the $600 threshold. Sorry, Uncle Sam says so. ;)

[Will Barnard]

Lily,
This is only my opinion, but from a business standpoint, you are making a poor decision.
First off, even the $550 fee was a verbal one and thus, not legal binding so he can sue all he wants, winning will be next to impossible.

Second, "giving in" to his last second changes produces the appearence of weakness on your part. In business, you need to be fair, but firm. Tell him that the agreed upon arrangement, which you will always honor, was 10% of your net ($550) and no more. Also explain that he should keep in mind that you are an agent who gets things done and he can make many referral fees from you rather than trying to hit a homerun on just one!
Finally, I would explain to him that since you both belong to the same group, and the fact that he is just starting out, he does NOT want to create an image and name forhimself as a person who makes last minute deal changes and reverts on his agreements. You are not the one who has done this, so the reputation at risk is his, not yours.