Pennsylvania Finder’s Fee Agreement Regarding Real Property Sales

State:
Multi-State
Control #:
US-0154BG
Format:
Word; 
Rich Text
Instant download

Description

In a real estate context, a finder's fee may be paid for locating property, obtaining mortgage financing. or referring sellers or buyers. A finder's fee is money paid to a person for finding someone interested in selling or buying property. To conduct any negotiations of sale terms, the finder may be required to be a licensed broker or he violates the law. However, state laws, which vary by state, may also provide an exemption for certain individuals, allowing them to be compensated without the necessity of licensure. For example, one state's law allows an exemption for either a property management firm or an owner of an apartment complex to pay a finder’s fee or referral of up to $50 to a current tenant for referring a new tenant. The fee can be in the form of cash, a rental reduction or some other thing of value. The party claiming compensation under this exemption is not allowed to advertise for prospective tenants.
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FAQ

A finder's fee isn't legally binding, so it is often simply a gift from one party to another. This is commonly seen in real estate deals. If someone is selling their home and their friend connects them with a potential buyer, the seller might give their friend a small portion of the sale when the deal is finalized.

Except as provided in subsection (b), an insurance entity or licensee may not pay a commission, brokerage fee, service fee or other compensation to a person that is not a licensee for activities related to the sale, solicitation or negotiation of a contract of insurance.

As another type of finder's fee example, if a project is worth $50,000 in revenue, a reasonable amount to pay in finder's fee percentages should be 5-10% of the first project.

Under Pennsylvania law, a finder is not permitted to charge more than 15% of the total amount claimed.

Payment type: While finder's fees can be money or gifts, referral fees are always monetary. Payment source: Brokers pay finders directly. For referral fees, the lead broker receives the payment first, then passes it on to the seller who pays the referrer.

Except as provided in subsection (b), an insurance entity or licensee may not pay a commission, brokerage fee, service fee or other compensation to a person that is not a licensee for activities related to the sale, solicitation or negotiation of a contract of insurance.

The standard referral fee percentage could be around 10% for closed jobs. It could start at 2 5% for an email introduction with the client and go up to 15 20% for projects where the referrer deals alone with the client. You could also work with flat referral fees.

The terms of finder's fees can vary greatly, with some citing 5% to 35% of the total value of the deal being used as a benchmark. It's a staple of Fundera's business model. In many cases, the finder's fee may simply be a gift from one party to another, as no legal obligation to pay a commission exists.

Percentage referral fees have been approved in Pennsylvania.

The terms of finder's fees can vary greatly, with some citing 5% to 35% of the total value of the deal being used as a benchmark. It's a staple of Fundera's business model. In many cases, the finder's fee may simply be a gift from one party to another, as no legal obligation to pay a commission exists.

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Pennsylvania Finder’s Fee Agreement Regarding Real Property Sales