Expert: Mike Fortunato - 2/23/2010

Question
QUESTION: Mr. Fortunato,

Greetings, I'm following up from a previous question concerning finders fee for connecting capital with a real estate development deal.

I've been told the finders fee can be issued as a 1099 payment if I am designated as a "consultant' to the project.

The project in question is in Colorado and I came across a court case determining finders fees are not eligible to non-licensed persons in the State:

Amadeus Corporation v. McAllister, 2009

What is the best way to proceed to secure the fee?

ANSWER: Unfortunately, I'm in California so I'm not familiar with Colorado real estate regulations. You would be best served to consult with a real estate attorney in that state to determine the legality of finders fees to unlicensed individuals. As for the 1099 status, that shouldn't be an issue so long as you aren't regarded as an employee.

---------- FOLLOW-UP ----------

QUESTION: Thanks!  What kind of a rate or fee can I expect for a consultation and document prep?

Answer
Unfortunately, I have to give another vague, pretty much useless answer! There is no standard fee for that sort of thing, so it comes down to whatever they are willing to pay (unless there was some sort of agreement ahead of time). I've seen them as low as $250 for a small leasing transaction, to as high as thousands of dollars for a large project. It really comes down to a meeting of the minds between the parties (and to improve your negotiating power, you should come to some agreement before putting the deal together).