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What is a Real Estate Bird Dog?
A Bird Dog is someone who finds and refers properties to an investor for a fee.
It is a great system for a new investor, who is still learning the real estate game, since it will be like “training on the job.” It will also provide a way of making money immediately, sometime within days of starting, which can provide a great boost and motivation factor for someone starting the business with no money or credit.
The skills that the investor learns for being a real estate bird dog will be important for other strategies as well:
- Locating Buyers– this comes even before locating properties. It is called the “Reverse Approach” or “Shopping versus Selling Mentality.” It is important to know what the buyers/investors are looking for and create a trust between the Finder (Birdogger) and the Investor. A buyer list should concentrate on quality instead of quantity: a dozen of ready and able investors is all the Birdogger needs to have a successful business. These buyers have to be cash buyers, so the deal can be closed quickly with no delays.
- Locating Properties– once the buyer’s list is in place, screening of the buyers will provide enough information to compile the properties’ requirements: area, price range, type of property. With this information, it is a matter of finding the properties meeting the requirements and in this economic chaos it is fairly easy: foreclosures, preforeclosures, REOs, abandoned properties, absentee owners – all these are ideal properties for a Birdogger to locate and bring to his buyers’ attention.
- Packaging the Deal– this is where the deal is put together. The Birdogger notifies his buyers that he has located a property meeting their requirement. Before providing the address and other specific information, a Bird Dog Consultation Agreement should be signed, stating payment, confidentiality and other important clauses. This is essential in protecting the Birddogger from being cut out of the deal and it provides full disclosure of the transaction.
What are the fees for a Real Estate Bird Dog?
It depends – a good practice is charging $500 plus 2.5% of the proceeds, if the deal is flipped or sold by the investor, or $1,000 if the investor plans on keeping the property. This is how the deal works:
- House is located with a sale price of $50,000 – it is assigned by a Birddogger to one of his buyers/investors;
- The investor purchases the house – he/she keeps it for investment – a fee of $1,000 is paid to the Birddogger;
or
The investor purchases the house and flips it for $70,000 – there is a $18,000 spread after closing costs: the Birddogger makes $500 plus $450.
All these terms will be stated and agreed upon in the Bird Dog Consultation Agreement, which you should have prepared by a knowledgeable attorney.
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Source by Laura Al-Amery