Notice to grifters, the exit is the first door to your right.
What Is a Finder's Fee?
A finder's fee (also known as "referral income" or "referral fee") is a commission paid to an intermediary or the facilitator of a transaction. The finder's fee is rewarded because the intermediary discovered the deal and brought it to the attention of interested parties. The presumption is that without the intermediary, the parties never would have found the deal, and the facilitator thus warrants compensation.
Depending on the circumstance in which the deal is established or completed, the finder's fee can be paid by either the transaction's buyer or seller.
Key Takeaways
- A finder's fee or referral fee is a commission paid to the person or entity that facilitated a deal by linking up a potential customer with an opportunity.
- A finder's fee is a reward and an incentive to motivate the facilitator of the transaction to keep providing referrals to the buyer or seller in the deal.
- The terms of a finder's fee can vary from deal to deal, with a payout usually representing a percentage of the completed sale; in some cases, the "fee" is just an informal gift.