When to Charge a Finders Fee

A finder’s fee is charged whenever a person in the position to be an intermediary helps two parties to broker a deal between them that is mutually beneficial to both. The intermediary normally has something to gain as well and when the potential profits made in the deal are substantial a fee is normally charged for the services that have been provided. Finder’s fees are normally charged when there is a great amount of money changing hands or if the intermediary has paid money out in expenses in order to help bring the two parties together.

Being an intermediary between two parties who are doing business can be quite lucrative and this is a position that many people use in order to make money. In large deals that may involve the sale and purchase of a large asset a finder’s fee is essential and in the real estate market this is typically how the system works. It may take considerable effort to help a client find exactly what they are looking for and expenses including travel charges should be reimbursed. The amount of time spent in the role of intermediary can also be calculated in terms of dollars and can be quite considerable depending upon what the acquisition may be.

In a very large deal such as the purchase of a company the finder’s fee could be very substantial, perhaps even ranging into the millions. To calculate such a fee one normally charges a percentage although some companies who specialize in this type of work offer a flat fee for their services. If the finder’s fee is being calculated using a percentage it can be as high as ten percent but it is normally much less. The amount of the fee often varies with the type of acquisition but in general it ranges from about .5 percent to 1.0 percent. In some markets the finder’s fee is called a “referral fee”, especially when the client has been made aware of the role of the intermediary by another party.

A fee should be charged anytime that two parties are benefiting from the work put in by an intermediary, whether this be in a monetary sense or otherwise. Intermediaries involved in this type of work may spend hours trying to find the right deal for their client, as well as paying out money in expenses. The fee should always be enough to cover any expenses that are paid as well as to figure in what the time of the intermediary is worth. For someone who has been looking to acquire a specific asset for an extended period of time the work of an intermediary is crucial and should be treated as such, after all, a finder’s fee is a small price to pay for the labors someone has put forth to connect two parties who very well may make a great deal of money.