Couple points

In Pennsylvania, at least,it IS illegal to accept referrral fees from mortgage brokers unless you have a brokers license or are an employee of a brokerage.Surely, Pa isn't the only dumb state that has this law. Pa does have some pretty dumb laws.
I have optioned perhaps a dozen properties in the last year and a half mostly for $10 option consideration with a couple $100. I am sure there are properties that require several thousand in option consideration, but if you're talking residential, that's not necessary.
I know of 1 guy (yes, he teaches a $5000 seminar on this) who options luxury homes for $100. I have seen copies of checks running upwards of $300 THOUSAND for his profit.
What is your definition of seriously undervalued? I option these properties at 80-85% of fair market value. That's pretty close to what a seller will realize if selling their home through an agent.
Generally, my option has a standard 6 month term. That is negotiable.
Risk? Which is riskier? $100 and some marketing expense and failing to find a buyer in the option period or the chance of getting caught doing something illegal?
I have HUD 1 settlement statements showing my profit to be upwards of $8500. I'd have to do a lot of $300 referrals to make that.
Do some of my options expire? Sure.
This is not a personal criticism of you, but there are so many people here that are stuck with "in the box" thinking or that if something is non-traditional it is a scam.
I live in a small town. How long would I last if I were ripping people off?

> Maw Maw,

> It's not illegal, but I don't know how easy it would be for you to make
> any real money yet.

> There 2 ways that I know of to make money this way.

> First.. from mortgage brokers. I was a Bank Manager. Several brokers would
> come in, take me out to lunch, and give their pitch about why I should
> give them referral business.

> Now, I work for a HUGE bank, but there ARE several types of loans we don't
> do. We don't touch people with bad credit. We don't do construction loans
> under $500k. And there are several types of commercial/investment property
> types that we don't finance.

> There was one broker that I trusted and had a good relationship with. If I
> couldn't do the loan, I'd give his card to the customer. If the deal got
> done, his company would give me $300.

> But I was a Bank Manager with hundreds of clients coming to ME. I don't
> see how a regular person could make any substantial money with this
> method.

> Second way... you find a seriously undervauled property and purchase an
> option to buy for 30-60 days. It will cost you a few thousand. Then you
> have that amount of time to find a buyer. If you do, ask for a finders
> fee. If you don't, your option expires worthless.

> You say that you found some of these properties? Then you need to buy an
> option.

> If you're not a heavy hitter in the real estate game, this is very risky
> because you're not networked and don't have a pipeline of possible buyers.
> And I'd imagine that nobody would sell that sort of option to a rookie
> anyway.

> You can read more about this in the Rich Dad Poor Dad series. I'm no
> expert and have never done this myself.

> OR.. if you think you have a knack for finding good deals and finding
> buyers, why not get a real estate license? Much less risky.

> Hope this helps.