]Does anybody know the laws for bird dogging in Illinois?
Legally also what is the difference between a real estate agent vrs. a bird dog under the law?
I would appreciate all the help I can get in the matter.
Also if anyone is training bird dogs I would like to hear from them.[/b]
I’m training bird dogs. I have 3 of them right now.
lol
Well I know it is NOT legal in PA
Why is it illegal?
Here is a good post. Mostly about Wholesaling (LEGAL) and Nancy talks about birddogging
http://www.reiclub.com/forums/index.php?board=24;action=display;threadid=18109
Folks I’m afraid It is illegal to practice bird dogging in Illinois withgout a License. I am not a lawyer and this is not legal advice but go to www.idfpr.com click on real estate freq questions, decide for yourself. It’s really sad I wanted to get into it so much it could have changed my life! But I’m not going to do anything that might be illegal.
I’m no lawyer but I’ve read the law in many states regarding the scope of a broker/ agent and I’ve yet to read one that couldn’t be interpreted in different ways. A good lawyer would tear most of these laws apart in court. It’s kind of like saying word-of-mouth is illegal. Until I see some landmark court cases saying otherwise, my opinion is that it is certainly legal and I encourage beginners to do it.
It really would be a good idea to got to www.idfpr.com before making that statement. It really is pretty clear.
It really would be a good idea to got to www.idfpr.com before making that statement. It really is pretty clear.
LOL. Since I hate making incorrect statements, you can best believe I looked through that site before saying anything. Copy and paste the exact wording from that site or send me a direct link to where you interpreted bird dogging as being illegal.
Ok but this is the last time. I do not want to argue with you. But it is pretty clear. I have done the research for you. Had you really gone to the sight and explored it you would have found the following. Remember just because somthing is being practiced doesn’t automaticly make it legal. I’m not a lawyer either but the following seems very self explanitory.
When do I need an Illinois real estate license?
A. A person needs a real estate license if they provide assistance which is in any way intended to result in the sale or lease of real estate. The definition of the word “broker” under the Act provides 11 examples of the types of “assistance” that require a real estate -license. Included are: representing clients in the negotiation of real estate sales contracts or leases, and issuing advertisements for the sale, purchase or lease of real estate.
The assistance must be provided for others. Accordingly, a person who buys, sells or leases real estate as a “principal” does not need a real estate license.
Compensation is required. Therefore, a person who provides assistance on a real estate transaction to a friend or relative, without compensation, does not need a license.
Yes. Exemptions from the license requirement are set forth in Section 5-20 of the Act. In other words, some individuals and entities who engage in the “practice of real estate” in Illinois do not need to obtain a real estate license from DBRE.
Included in the exemptions are owners of real estate and the employees of the owners of real estate. See Section 5-20(1) of the Act. Accordingly, owners of real estate and their employees may advertise the sale or lease of their property and negotiate real estate contracts and leases without a license. Note that for this exemption to apply, (i) the “practice of real estate” must be limited to those properties “owned,” (ii) the employment relationship must be per a “W-2" wage basis, not per an independent contract basis, and (iii) the employer must hold title to the real estate, not just have a financial interest in the real estate (there must be a direct connection between the unlicensed employee and the holder of title).
Also included in the exemptions are (i) attorneys acting under an executed and recorded power of attorney and (ii) attorneys whose services for a real estate consumer are limited to the practice of law. See Section 5-20(2) of the Act. Note that attorneys who engage in the practice of real estate must obtain a real estate license (attorneys are exempt from the pre-license education but attorneys still must pass the exam and obtain a real estate license to practice real estate).
It is illegal for an Illinois real estate licensee to pay a fee for the referral of a real estate client to any individual or business entity that does not have a real estate license. For example, an Illinois real estate licensee cannot pay a referral fee to an unlicensed friend or neighbor. Nor can an Illinois real estate licensee pay a referral fee to an unlicensed professional otherwise involved in real estate transactions, e.g., to an unlicensed employee of a mortgage company.
It is legal for an Illinois licensee to pay or receive a referral fee to/from another Illinois real estate licensee. It is also legal for an Illinois real estate licensee to pay or receive a referral fee to/from a person who has a real estate license in another state. See Rule 1450.205(a).
Maybe you should reread what you just sent. I thought you may of found info that I didn’t but I was wrong.
A person needs a real estate license if they provide assistance which is in any way intended to result in the sale or lease of real estate. The definition of the word “broker” under the Act provides 11 examples of the types of “assistance” that require a real estate -license. Included are: representing clients in the negotiation of real estate sales contracts or leases, and issuing advertisements for the sale, purchase or lease of real estate.
By the given definition, “assistance” is representing a buyer or seller, negotiating of contracts, advertising a sale or purchase. Which does a bird dog do?
It is illegal for an Illinois real estate licensee to pay a fee for the referral of a real estate client to any individual or business entity that does not have a real estate license. For example, an Illinois real estate licensee cannot pay a referral fee to an unlicensed friend or neighbor. Nor can an Illinois real estate licensee pay a referral fee to an unlicensed professional otherwise involved in real estate transactions, e.g., to an unlicensed employee of a mortgage company.
This states that a RE licensee cannot pay a fee for referrals of a client, and licensees paying fees to one another. Absolutely nothing to do with a bird dog giving an investor the heads up about a property and receiving a fee for it. Bird dogs have no part in the sale of real property, they provide no assistance to either buyer or seller.
Your right though, it is pretty clear.
I agree with you Danny. Birddogs are not involved in the transaction so it is not an illegal practice (as long as you keep them out of the transaction).
What if we looked at this from a ‘worst case’ scenario? First, a bird-dogger is seeking to provide a good lead to an investor on the premise of being paid for it. He provides the lead and then… since there are no contracts between the investor and himself, or the bird-dogger and the Seller of the property… the Investor decides to stiff the bird-dogger and deal directly with the Seller, leaving the bird-dogger empty handed. This is no fun for the bird-dogger.
So, to avoid the worst-case scenario, the bird-dogger gets the Seller under contract to either “purchase directly or indirectly through an investor 3rd party” and now has a layer of protection regarding the investor. But… what he’s just done is made himself, by definition, an agent who is seeking recompense for the securing of a buyer.
Now… all arguments aside, if there ends up being a suit or charges made, my belief (and I’m speaking from my belief, not legal precedence)… is that the judge is going to take a look at the actions of this bird-dogger and say, “Quacks like an agent, Walks like an agent, but not licensed as an Agent” and this bird-dogger is now in a pretty bad spot that, I, personally wouldn’t want to be in.
Those are my thoughts. Some people play these sort of things on the safe side, others on the aggressive side till they get caught. Like my Mom says; “To each his own, but better safe than sorry.”
My dos centavos,
Smart Mother!
The only way I see it working and still be legal is if the bird dog actually does the buying and then selling to the investor. For example my wife and I are in the midst of a deal. Pre-construction cost is 50,000 less then what it will be at the end of construction. (Long story people just take my word for it) Now I am going to buy it with no money down. Either I will rent it or sell it. I may not have a investor lined up right now but this is going to be a sweet deal. Once I close it is my property to do whith as I wish. But there is a big difference in controlling the property and owning it. This would not be viewed as I view Illinois law as bird dogging!
So you can still deal in real estate it’s just a lot harder.
I purchased a large instruction set on bird-dogging and even though I didn’t have any legal problems with it in CA (other than bad press from those who were scamming people out of their deeds)… I eventually came to the same conclusion you did.
It’s better to just approach this as an investment through purchase, improvement and re-sale rather than try to turn a fast buck in under two days with a lot of headaches and drama thrown in. Even the wholesaling courses will admit that the big bucks are in property rehabs and rentals and they offer their bird-dogging courses mainly to those who are challenged for financing.
For three years I’ve bought, sold and rented out double-wide trailers and come out positive each time. Now I’m looking into my first stick-built rehab project. I became a real estate agent to immerse myself into the business and know the market locally. That’s not a necessity, but my point is that investment in real estate should be approached (IMHO) as a mid to long term investment… not a two-week stab at turning a quick buck, leaving all the real money on the table for the investor you bring the deal to.
Dos mas centavos… no extra charge.
A bird dog is a very informal title. No one starts a business, hires employees, creates systems just to find deals for investors. They do it for a little extra pocket change. It would be unwise for an investor to stiff a bird dog. That’s burning your pipeline to more deals. The investor should always deal directly with the owner of the property because bird dogs have NO part in the transaction.
Bird dogs say “Theres a vacant property over there” no more, no less. They don’t even come close to being confused with an agent. Those who do confuse the two are confused about the role of a bird dog and/or can’t read.
If a bird dog was capable (financially or otherwise) of rehabbing the property themself, they wouldn’t be alerting the investor of it just to make 500 bucks.
Anyways, I think this topic has been chewed to death on this forum.
Have a nice day everyone.
These days, without a contract, anyone runs the risk of not getting paid and having nothing they can do about it in court. Even though “biting the hand that feeds you” by not paying a bird-dogger makes zero sense, I imagine it happens all the time. I say this because I’ve seen real estate agents make the same claim of offering $500 per referral… and then they don’t pay up when the deal closes escrow.
So, when contracts -are- in place, the bird-dogger is doing more than just giving a “heads-up” to an investor. He’s telling the Seller he intends to purchase the property (which he has no intention of doing) just to add a layer of protection for himself when he gives the heads-up to the investor. Jargon-wise he’s now more of a wholesaler, but in court they don’t care about terms like bird-dogger or wholesaler… however they are very concerned about “the establishment of agency” and “written contractual agreements”.
So, to sum up… all I’m saying is that bird-dogging (in Illinois), either with or without a contract with the seller, comes with it’s own set of risks.
I’d imagine investors burn bird dogs. The bird dog loses out on 500 dollars and knows to never work with that investor again. Dumb investor just cut off one supply line to save 500 bucks. Life could be worse. I tell my bird dogs to never contact the owner of the property. That puts them at risk of being viewed as an agent.
If the bird dog crosses the line into wholesaling, he or she is also protected because he or she has equitable interest in the property. There’s nothing wrong with not having any intentions of purchasing a property but rather assigning the contract. That does not put you at risk of acting as an agency. Assigning a contract is within the full rights of the party entering into the agreement unless stated otherwise.
As I’m sure you know, a legal agent is a representative. Bird dogs don’t represent buyers, wholesalers don’t represent buyers. A bird dog in the purest sense of the term does nothing more than alerts the investor of a property. An investor and bird dog can enter into agreement about referral fees but a bird dog should never enter into any formal or informal agreement with the seller. That would be crossing the line into either an agent or wholesaler.
From the laws that kocol posted, I have seen nothing that would construe a bird dog as being an agent. Agents may have problems paying referral fees for clients. That has absolutely nothing to do with an investor paying referral fees for property information from an unlicensed individual. Ofcourse everyone will form their own opinions, and the laws do seem pretty cut and dry.