Deposit / Finders Fee Question

[Andrea M.]

Recently I have connected with a local wholesaler who has presented a property to us for consideration. He explained that his fee is taken off of the front end when a deposit is made and contracts are signed, which is refundable, in the event the the deal doesn't close. Which to me raised a red flag.

Is it customary to get paid your finders fee at closing or at the signing of the contract out of the deposit money?

Question to other investors: In the situation noted above, would you give your deposit/EMD to your Escrow company and pay the wholesaler once the deal closes?

[Steve Babiak]

You are paying for the "assignment of contract" - call that fee whatever you want. As the wholesaler, you want to be paid as soon as possible - so the wholesaler wants to be paid upon performing the assignment. As the end buyer, you want to pay as late as possible - so the end buyer wants to pay at closing. Whatever works for both of you - which means negotiate as well as you can!