Ask Cornerstone: Do brokers give referral fees for bringing a person needing financing and a hard money lender together on a deal?

loan referral fee

Do brokers give referral fees for bringing a person needing financing and a hard money lender together on a deal?  I have a friend with a property under contact in Indiana. She needs a loan for about $100K. How much can I get compensated?

Indiana’s lending laws and regulations might be different but in California most of the private money loans are made thru the brokers just as hard money loans are. The reason is that by using a broker, the private lender is not restricted by the laws that conventional loans are and can charge the higher interest rate they require for investment.

The broker arranging the loan charges points for the effort. So the broker can share portion of his/her points with you (traditionally 0.25 to 1.0 point). However if you do not have a real estate license you are not allowed to discuss loan terms or be involved in any loan negotiations. So the best way to get paid is to discuss your finder’s fee with a broker first. If you come to an agreement then introduce the borrower to the broker. Since you are in Indiana, the above might not apply. The best thing would be to talk to few hard money lenders in your city and find out what the rules are for paying finder’s fees.

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