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Author Topic: What's a fair bird dog fee?  (Read 26386 times)

Offline Steve in San Fran

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What's a fair bird dog fee?
« on: April 28, 2003, 02:13:56 pm »
I recently answered a 'lease option needed' ad for a nice property I own in Frisco and want to get leased.  The reply was from a bird dog who was representing the potential tenant/buyer.  This guy wanted what I considered a ridiculous fee based on my admittedly minimal experience with bird dogs.  

I searched the archives here and on another board and could not find any general rule of thumb for fees other than they should vary in relation to the profit in the deal.  Does anybody have any market-proven guidelines that creates a win-win for investor and bird dog?

Here's the numbers on this deal for reference (L/O terms reportedly were OK with tenant/buyer):

One year lease/option for a brand new 4/2/2 with many upgrades.  Rent of $1500/mo. with a $200/mo credit toward purchase price of $170k.  Option consideration of $5k down plus 1 month security deposit.  Buyer thus has over 5% equity after 1 year from combo of $5k down, $2.4k rent credits, and $1.7k security deposit--should be enough to get him financed as credit problem was due to one time event beyond his direct control & he makes a good salary.

The bird dog wanted half of the option consideration plus half of whatever additional down payment the buyer made at closing after one year.   That's a minimum of $2500 upfront and $2050 a year later if/when tenant exercises the option.  Assuming the buyer saved another ~5% cash to reach 90% LTV, the bird dog wanted half of that as well--another $4250.  His total fee thus is about $8,800.   I politely told him he was about 10X what I thought was fair and we broke off discussions.

Any thoughts appreciated.  Thanks!

Steve in San Fran

Offline Admin

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The standard "it depends"...
« Reply #1 on: April 28, 2003, 02:34:29 pm »
Steve,
Yes, I agree with you this person is high.  However, it depends on your market and your situation.  I paid someone half the upfront of a 4k option fee in early March for bringing me some TBers.  It was worth it at the time to me and might be again as I tire of the carrying costs.  Prior to that I had never paid more than $500.

I've also filled props with buyers through licensed agents on several occasions.  I pay the agent a 70% leasing fee initially and offer them the remainder of a sales commission on the backend if the TBer exercises.

An investor friend of mine here in town and I will help each other out with sellers and buyers and our standard fee is $500 per.  I normally pay $500 for a closed transaction with a regular bird dog.

It's likely this bird dog may be bending some of the licensing rules in your area as they don't have your property under contract and thus, are not a principal.
So, as you probably surmised, there's no "right" answer and it's best generally to follow your gut.
There's Only Two Things in Life: Reasons and Results.  Reasons don't count.  - Anonymous

Offline hassansr

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Re: What's a fair bird dog fee?
« Reply #2 on: October 25, 2008, 09:39:46 pm »
I pay 5% of my profits on any deals that I wholesale, plus an additional 5% on any houses that my property locators help me sell. Meaning that if they bring me a qualified buyer that closes a deal with me, I give the property locators a referral fee. Doing this increases the number of voices that I have out there spreading the good word and finding buyers for me.

Hassan Omar
Shortsales & Wholesaling
www.shortsalehud-1.com

Offline fadi

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Re: What's a fair bird dog fee?
« Reply #3 on: October 26, 2008, 09:11:11 am »
Quick question... what difference does it make what someone else makes if he finds you a very good deal and you will make good money?
Location: San Antonio, TX
http://www.fadizeidan.com - All About Marketing Blog - A Must Read

Offline hassansr

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Re: What's a fair bird dog fee?
« Reply #4 on: October 26, 2008, 09:52:31 am »
you know how hard it is to to find a qualified buyer nowadays...


One less person I have to spend ad money on when trying to wholesale.
Hassan Omar
Shortsales & Wholesaling
www.shortsalehud-1.com

Offline sabir

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Re: What's a fair bird dog fee?
« Reply #5 on: October 26, 2008, 09:11:50 pm »
Wow alot of differences on how much someone would pay their bird dog. I would only pay $500 - 1,000 cash depending on the deal.

Offline hassansr

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Re: What's a fair bird dog fee?
« Reply #6 on: October 27, 2008, 07:00:02 am »
typical profit on a wholesale deal is usually 10k; 5% of that = $500


Hassan Omar
Shortsales & Wholesaling
www.shortsalehud-1.com

Offline fadi

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Re: What's a fair bird dog fee?
« Reply #7 on: October 27, 2008, 12:15:57 pm »
Wow alot of differences on how much someone would pay their bird dog. I would only pay $500 - 1,000 cash depending on the deal.

Let me get this right... you would walk away from a $30k profit on a deal, because a birddog asks for $5,000?

makes sense
Location: San Antonio, TX
http://www.fadizeidan.com - All About Marketing Blog - A Must Read

Offline Mr Investor

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Re: What's a fair bird dog fee?
« Reply #8 on: October 27, 2008, 03:05:39 pm »
Wow I only charge $500 per successful close.

Offline Joeabbott2008

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Re: What's a fair bird dog fee?
« Reply #9 on: November 13, 2008, 03:16:46 pm »
If I sold my position in a contract and the figures were solid, I wouldnt mind walking away with a $5,000 profit.  If someone has a problem with what you make just do a double closing. That way neither person knows how much you are making.

Offline Lamar

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Re: What's a fair bird dog fee?
« Reply #10 on: November 13, 2008, 09:44:54 pm »

Let me get this right... you would walk away from a $30k profit on a deal, because a birddog asks for $5,000?

makes sense
[/quote]

Yeah Right! lol I'd probably close that deal in a second. But a birddog getting that much would have to do a little more than sending me the referral. I'd make him/her work for that $5K. It wouldn't be too much, but the time factor would be fair for both of us. A simple referral for $5K will not do in my book!

 :cool
J.Lamar Ferren
The "New Breed" Investor
There's a "New Breed" way of investing in real estate and if you don't get on board, then you could get left in the dust!
Head over to my site to learn more---> http://www.JLamarFerren.com

Offline fadi

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Re: What's a fair bird dog fee?
« Reply #11 on: November 16, 2008, 12:04:00 pm »
Lamar,

I don't like paying that much for referral either, I've paid $1k for referals for both buyers and sellers before. But like you said, if the deal is really good, I would close it.

For him/her to make that $5k they need to get me a killer deal but I would not rule it out just because I don't want to pay more than $500. Cost of lead is part of the purchase price.
Location: San Antonio, TX
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Offline chiconya

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Re: What's a fair bird dog fee?
« Reply #12 on: November 17, 2008, 07:01:07 pm »
Wow,

I didn't realize a bird dog could get so much. I haven't used one yet but I only plan to spend between 250.00 and 500.00. That's what I am advertising for now.

Offline MDwholesaler

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Re: What's a fair bird dog fee?
« Reply #13 on: November 17, 2008, 08:53:07 pm »

I look at at it as if that bird dog gets me a deal then they should be taken care of. If they consistently provide leads then I up their fee. I don't just mean sending me an address but them actually prequalifying the buyer to know that they are motivated. This takes most of the work and time out of the deal for me. I'm not going to be greedy and short change someone who could provide me with numerous deals going forward.

Offline fadi

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Re: What's a fair bird dog fee?
« Reply #14 on: November 17, 2008, 09:14:19 pm »
Wow,

I didn't realize a bird dog could get so much. I haven't used one yet but I only plan to spend between 250.00 and 500.00. That's what I am advertising for now.

I found a house! the seller thinks it is worth a $100k, and willing to sell it for $70k... It needs carpet and paint.. similar houses on the market selling for $140k! I will give you this lead, but I want more than $500!

will you pass?

Location: San Antonio, TX
http://www.fadizeidan.com - All About Marketing Blog - A Must Read

 




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