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“Yield Premium” for Repairs or Fees

We have a transaction in which we are using our “yield premium” or commission to pay for about $8,000 of repairs. The seller won’t do the repairs, and the buyer cannot afford to do the repairs, so we increased the rate to get more commission. We then agreed to credit the commission to the contractor. This is all legal and we cleared it with the lender. We will net about a point after all the dust settles.

We tell this story b/c someone commented yesterday about our fees after reviewing our closing statement from another transaction in which we did the same thing. On the surface, it looked like we made a ton of money, when we in fact made less than a point. We “took one for the team” so to speak, and we’ll take more for the team if it helps us close transactions!

For straight, clean transactions, nobody touches our rates.

Jay Voorhees
Founder/Broker | JVM Lending
(855) 855-4491 | DRE# 1197176, NMLS# 310167