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What Is a Finder’s Fee?

A finder’s fee is the monetary compensation that is given to an individual who serves as a middleman in a transaction. Usually, a buyer and a seller are involved in the transaction. Sometimes, a lender and borrower are involved.

The need for a middleman arises from the fact that it is not always a simple matter to find a buyer or a seller. This is often the case when the deal in question is worth millions of dollars. More so, a middleman is often needed in cases wherein an item is difficult to find, such as rare toys and antiques.

The role of a middleman is to bring the buyer and the seller together, so that they can come to an agreement regarding the deal. For example, a person may be looking to sell a piece of property, but does not have the time to actively look for a buyer. A middleman can do the legwork and get in touch with prospective buyers. If he is able to find a buyer and is able to mediate a deal, he will be awarded a finder’s fee - a commission, if you will.

The same principle applies to some loans. These days, you will find a lot of web sites offering their services with regard to matching you with the most suitable loan provider in the market. If they are able to get you to borrow money from a certain lender, they may be rewarded a finder’s fee, depending on their arrangement with the lender.

Oftentimes, finder’s fee are agreed on beforehand, and is a percentage of the sale. The percentage varies widely and can be anywhere from 0.5 percent to 10 percent, or even higher in some cases.

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