Referral fee to broker for RTO buyer

[Debbie]

Is anyone paying their mortgage broker a referral fee for a rent to own buyer that you put into a house? I was wondering if they should expect a referral fee and if so what is a fair dollar amount? I would send the rent to own buyer back to the referring mortgage broker to fund the mortgage when they are ready to purchase.

Thanks,
Debbie

 

[JoeRagona]

Hi Debbie,

It is only fair that you reward your broker for a referral. They should be involved from the beginning and along the way to help your tenant/buyer follow the plan to purchase in the end. Maybe ask your broker what they think is a fair number as we all have different `referral fees`.

 

[jseib]

For a high quality referral we are giving our brokers 1 point (1%) plus of course they get the mortgage on the property.. At the same time they process all our leads (without any pre-qualification, so they do a lot of duds to)

Of course you have to be clear what your expectations are for referrals.. If you want someone with a large down payment and a specific price range, be sure to tell them upfront..

With the new 20% rule my company has started to really tighten up on who we allow into our program... So callers off classified ads etc are having trouble making the cut so mortgage brokers are becoming more and more valuable to us.

 

[Debbie]

QUOTE (jseib @ May 19 2010, 05:57 AM) For a high quality referral we are giving our brokers 1 point (1%) plus of course they get the mortgage on the property.. At the same time they process all our leads (without any pre-qualification, so they do a lot of duds to)

Of course you have to be clear what your expectations are for referrals.. If you want someone with a large down payment and a specific price range, be sure to tell them upfront..

With the new 20% rule my company has started to really tighten up on who we allow into our program... So callers off classified ads etc are having trouble making the cut so mortgage brokers are becoming more and more valuable to us.

Could you please explain what number the 1% is calculated on? (is it todays purchase price or the tenant buyers future purchase price?)

May I ask how you have tightened up on buyers you accept and what your criteria is as far as the tenant buyer is concerned? ie. how much option money do you require up front etc. I hear you with the 20% downpayment rule...you want more cash up front and a strong buyer that will cash you out in a couple years.

Thanks,

Debbie

 

[kboughen]

QUOTE (Debbie @ May 19 2010, 03:21 PM) what number the 1% is calculated on?
I`m not sure how jseib is calculating this, but my experience is that the 1% RTO referral fee (often referred to as 100 Basis Points, or, 100 BPS) is typically based on the entry purchase price of property.


When the RTO lead buys the property at the end of the RTO Term, the Broker representing the RTO lead would be paid "X" BPS of the exit mortgage amount, by the Lender funding the deal. The BPS amount depends on the specifics of the mortgage.

 

[Debbie]

QUOTE (kboughen @ May 22 2010, 09:45 AM) I`m not sure how jseib is calculating this, but my experience is that the 1% RTO referral fee (often referred to as 100 Basis Points, or, 100 BPS) is typically based on the entry purchase price of property.


When the RTO lead buys the property at the end of the RTO Term, the Broker representing the RTO lead would be paid "X" BPS of the exit mortgage amount, by the Lender funding the deal. The BPS amount depends on the specifics of the mortgage.

Thanks very much Kevin!

That makes sense and answers my question.

Debbie

 

[MarkTorgerson]

QUOTE (Debbie @ May 17 2010, 03:51 PM) Is anyone paying their mortgage broker a referral fee for a rent to own buyer that you put into a house? I was wondering if they should expect a referral fee and if so what is a fair dollar amount? I would send the rent to own buyer back to the referring mortgage broker to fund the mortgage when they are ready to purchase.

Thanks,
Debbie


We are paying $1,000 to the broker for a referral fee. He also then works with the tenant/buyer over the next 2 to 3 years to help repair their credit. He would get paid again in the form of a new mortgage when the tenant/buyer exercises their option.