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Updated almost 6 years ago, 01/15/2019
BirdDogs - Finding them and paying them.
I have never used birddogs before, but I know a lot of investors have. Other than Cragis list or your local investors group, how can you find a good birddog? How much do you pay? Some say they pay a flat amount and some pay a percentage.
Sharon,
Once you find a bird dog ask them what they are looking for as a fee. If your comfortable with their offer then great, otherwise you negotiate with them.
- Curt Davis
Curt -
That's a good idea. Do you use birddogs? Is there a fee in your area that you would consider typical?
We use birddogs all the time. We pay a percent of the profit, based on the work that they do. Obviously we pay a bigger percentage if they get the paperwork from the homeowner, etc. than if they just give us a name and phone number.
Jackie-
That's very helpfu. Can you give me some guidelines re: the percentages?
Thanks.
Generally we range from 5% to 20%. Most are at the 20%. We are flexible however based on volume, etc.
Jackie -
By "getting the paperwork from the owner" do you mean they put the house under contract for you?
Hi Sharon,
I can give perspective on both sides of the fence as I started as a bird dogger.
My first birddogging expercience the investor offered me $1000 for any property I passed off that they closed and all I had to do what get what the homeowner owed and who the mortgage was with and name and address. In the first week, I handed over 9 referrals with that information. At that point the investor reconsidered their contract with me. The contract was COMPLETELY VERBAL.
I do NOT recommend that AT ALL. I was uncomfortable the whole time, but was so eager to learn that I never pushed the issue. I was paid on every deal with this investor. By the time we parted ways we were splitting the deals 50/50 because I had brought in so much business and got paperwork, met with BPO agents and did everything involved.
The second investor I bird dogged for I got 15% of the net profit. Here is where I will offer more advice. I had a one page contract that outlined how I would be paid on the 2nd closing within 24 hours off the net. I found out a couple weeks ago, that a house I got under contact for them was closed back in June. Now guess what? I had NO idea it closed and I was owed money. It wasn't until I saw a sold report in the local area and believe me I was upset. The one thing my contract lacked is what was to happen if I wasn't paid in a timely manner. IT SHOULD HAVE HAD AN INTEREST DUE after a certain number of days, etc., but in reality if push came to shov, it wouldn't have been worth me going to court, but my trust in the investor is gone.
Keep in mind, this investor also told me they did some rehab, but never provided receipts, so again, I had no way to verify what their actual net was.
I think trust is very important between a bird dog and the investor. My experience wasn't all that bad as I got paid, but certainly a learning experience.
Maryann -
I am a wholesaler so I hadn't even looked at it from a rehabbers perspective. That's very good info.
It seems like in my area, bird dogs are typically paid a per house fee. If I were going to do that, I would probably write it into contract #2 as the fee being $$ paid to the person as a referral fee or something like that. Their check would just come out at closing (the same as if there was a Realtor involved). That would protect the birddog.
I would be interested in learing about your experiences further. Maybe we do that at a later date.
Thanks for your help.
Sharon and Maryann,
We have a 5 page letter of agreement with our "birddogs" which spells out what we expect, what our responsiblities are, what the compensation is and how it's paid. In addition, our birddogs are kept in the loop with a weekly update on the status of the short sale. I agree that trust is important, but I also think you need to have everything in writing. Along with the letter of agreement, I get a W2 so that I can 1099 the Birddogs at the end of the year. The agreement clearly spells out that they are an independent contractor.
Communication is key. We take good care of our "birddogs", and have even surprised them with an occasional bonus.
I have a contrarian view on getting everything in writing. I think having things in writing prevents misunderstanding and can reduce the likelihood that you will be cheated out of your fee. But it can also reduce your potential market because many investors will not want to have a written contract with an unknown person. In addition, the relationship and terms will often change as you become better at what you do and you will have to get new contracts signed periodically, which can be a nuisance.
I have done many deals based on a verbal agreement and never had a problem with any of the other parties. And if I had, I would not have done business with that person again and not worry about it too much. If you are a good bird dog, you should be able to find many deals and once you have established a good relationship with some honest investors, you can start putting things down on paper.
@ Jackie & @ Vickram -
I am a big fan of paperwork also. Everyone understands what is expected. I worked with one investor that wanted to even do contracts to purchase my house "verbally". I'm certainly not doing that.
On the other hand, I have been lucky to have been involved in some verbal agreements and they always worked out the way they were supposed to. I guess I was working with honest folks.
I will say that it makes me more than a little uneasy when people are against putting things in writing that we have verbally agreed on. That to me is a red flag.
I feel like I am taking crazy pills!!! You cant pay a bird dog on the HUD at closing!! IS your bird dog a licensed RE agent? You can not pay them this way then.
Bird dogs are paid under the table with a hand shake. How can a bird dog take someone to court if they dont get paid? Its like saying" I am going to go to the police because my drug dealer ripped me off " !!
- Curt Davis
Curt -
No crazy pills! We never pay birddogs on the HUD. They are paid out of our profit after the closing, and get a 1099 at the end of the year. It is all spelled out in our agreement.
Vikram - The birddog is the one who benefits from having it in writing. We are in control of the short sale process including the closing. Especially with short sales which can take 3-6 months to close, I think it is more comfortable for the birddog to have everything spelled out. If relationships and terms change, we just do a new letter of agreement. I agree, you can have a verbal agreement that works great, but you can also get burned. Having been on both sides of that, I would prefer not to get burned.....even once!
Hi Jackie
May I see the contract that you are referring to? I'm looking for a contract to use with investors.
Ron,
I just sent you a PM.
Originally posted by Jackie Patterson:
I just sent you a PM.
Jackie
sorry im new to this site im interested in seeing what the bird dog agreement should look like and also im interested in offering this service in ri and mass
i'd be interested in hearing from the AZ investors on birddogs... it has always been my understanding that paying birddogs in AZ is illegal unless the birddog is a licensed realtor... any ideas or suggestions for investors that aren't licensed real estate brokers?
Originally posted by Jackie Patterson:
We have a 5 page letter of agreement with our "birddogs" which spells out what we expect, what our responsiblities are, what the compensation is and how it's paid. In addition, our birddogs are kept in the loop with a weekly update on the status of the short sale. I agree that trust is important, but I also think you need to have everything in writing. Along with the letter of agreement, I get a W2 so that I can 1099 the Birddogs at the end of the year. The agreement clearly spells out that they are an independent contractor.
Communication is key. We take good care of our "birddogs", and have even surprised them with an occasional bonus.
Jackie,
I guess this is a pretty old post by now but I'd be interested in learning about your bird-dog agreement if you don't mind sharing. I followed your background and noticed that you do shortsales nationwide, as well as green development. I'd be interested in learning more about that since that's a personal agenda of mine in real estate.
KK
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Very interesting thread for the HUD IG!
As Curtis was suggesting, I find it funny that people seem to think that if they use a contract, insist in their contract that the parties are defined as they wish, that they will be viewed in that light instead as seen under regulations and law.
Make sure your drug dealer is an independent contractor, LOL!
Many insist on doing business illegally knowing they are in violation, like your corner drug dealer, agreeing to accept the consequences if they get caught. Many others ignore or refuse to accept regulations detaching themselves from reality to justify making profits the easy way. Acting unethically doen't bother them at all.
There is only one way to use the services of one who locates real estate deals without a real estate license, by putting them in a position as a principal with the buyer or seller.
Any contract with an illegal purpose is not a valid contract.
I know, few here have probably had the pleasure of meeing a HUD Agent, badge with gun, but I assure you they exist!
Hi Jackie I am in New York. I would like to see what a bird dog contract looks like. Thanks.
We have always paid either a fee or a percentage... It depends on their level of involvement. As a matter of fact, we are looking for more bird dogs right now! Any advice on how to find good ones let me know! The bird dogs we have have found us and we have never actively searched for them...
In Gary Keller's book, Flip, he suggests paying a bird-dogger $2 per address for vacancies.
The bird-dogger could be your employee.
Hi im interested where you got your contract or do you mind sharing?