I run ads and a birddog called me with what appeared
to be a potential deal. It turned out that, when i went
to meet him, the numbers went sky high. So was more
of a bait. Anyway, he was beginning to get his feet wet,
so i did spend an hour and educate him on how to
analyze the deal and how to get it into contract to assign.
My question is, what is a good compensation?
I will offer 10% of the spread between the purchase price
and my possible selling price ( from a conservative
standpoint). This will be offered at closing of the purchase.
If and when i sell at a price higher than my conservative
estimate, i will offer the 10% of the difference when i
close the sale on the back end. This makes everyone
happy.
Otherwise, how do folks do it? How are bird dogs
getting compensated.
I had one come to me and say that they get 10% of the
purchase price, which i find is insane, like 16K on a
160K purchase where the property will sell for 204K.
When i figure in the holding costs, the selling costs for
a flip, renovation if any and my profits, that number is
substantial.
A bird dog is someone thats only find you the leads for a good deal. A Wholesaler will find the lead make the deal and put in under contract, then sell the contract. Now get tricky the bird dog usually gets from $500.00 to $1,000.00 and the wholesaler with get more then that usually $5,000.00 but depend on him and the deal.
Sounds good. So there is a fine line between a birddog and
a wholesaler. A birddog can transform into a wholesaler
if and when he/she has sufficient funds to commit to a
contract or at the least is confident that the property can
be moved if the person is short on funds.
It appears that from that standpoint, my compenstation
to the BD is generous with the 10% on the spread.
Yes is a fine line. Depending in the persons aspiration is if they decide to be a bird dog for long or jump to a whlosaler. For example I quit my job on Sep 05 to invest in real estate full time I did alot of bird dogging till I saw the potential on real estate then on this finnal 2 week of the year I have put 3 properties of my own under contract 2 already have sold. Now your compensation formula is up to you what work on your formula and deal.
In Order to wholesale a property you have to have it under contract. That means doing the negotiations and the homework on the property with the owner. Then assing your contract to someone else.
10% ??? I am liscenced and am lucky to make 3% (split between agents) and…I have to babysit inspections, negotiate, actually work, etc… Rethink that compensation if all your receiving is an address, name , and number.
Ok, it was said above that a property needs to be under contract for the whoesaler to be able to get it resold fast. Suppose I put under contract or agree to buy a property from a homeowner.
NOW what right do I have to show that house to a perspective buyer? How do I barge in to show the property? how do I get the keys? Do I tell the original seller what I’m doing and when would I tell them?
I just never looked at a signed contract as having permission to control the property. Please a little explanation.
Well Larry,I can tell you but I have to charge…
LOL. You make your contract subject to inspections you can invite diferent buyers and tell them they are diferent people like plummers.inspector.interior designer and so forth.
And in the day of closing you make a double closing without the past owner being there. Or a seperate contract assigning all the right to the new person.
Tell the owner I’m bringing in another plumber. Tell the prospective buyer not to say anything to the present homeowner.
Don’t be looking at the house layout and construction or ask questions about the roof if you are a “plumber”
then I assumed most sellers would show up at their own closing, which in this case would be part of a double closing, “hello, Mr buyer, why is your plumber here too?”
I don’t think it’s a good idea to do any of that either.
What reason do you have to lie?
They need your help and if they really want it, it won’t matter that you have another person buying it. They are still getting what the two of you have negotiated just the end buyer is different.
You’ll be putting your reputation at stake if you start lying right of the bat.
I was just telling how to work with a doble closing scenario. You Should demand the owner to leave for the secound closing.
But since all I do is foreclosure, I just help them out of a ugly situation.
I give them up front money to get out of the house and start a new life, then I go fix it and flip it.
If you have a signed contract that says that you have the right to show the property, why do you need to tell tehm who they are? They signed the contract…