Bird-Dogging question

I am almost ready to begin playing the REI game. All my financing ducks are in a row and I am excited about the market here and getting started. Before I dive in neck deep though I would like to bird-dog some deals to see how the process works.

So here is my question :

I find a motivated seller and we agree to terms of the sale (contract). I pass this deal on to a REI who will do the flip. The REI pays me ‘X’ amount of dollars for bringing him or her the deal. What if the REI goes out to this seller and does his own offer and pushes me out of the deal? What would stop the REI from doing this - I have given him or her the details, behind my back the REI contacts the seller and I as the wholesaler get burned?

Again, I am new and I am just wondering if this has happened to anyone in the past?


Wrong part of the forum for this question. Unfortunately, it happens. He who writes the agreement has the power is my first rule. SO, I make my birdogs creates create their own Non Circumvent Agreement before I even want to know the address. If you have the home wrapped up on an assignable contract, with consideration given, you’d have recourse against the seller.
Hope this helps,

Just to add on a little to what David said above.
Even if you dont want to get your hands tied into it, by locking the seller into a contract…its best to take your deal to an investor that you atleast somwhat know, and draw up a little agreement between you and him on how/when he/she is going to pay you.
Most REI’s wont mind throwing a little $500-$1000 finder fee your way if theyre making a nice profit off of your well organized lead.
Plus, if they stiff you…theyre also running the risk of getting a bad name for doing so.
Sure, this bad name wont prevent them from doing anymore deals, but it will sure as heck make things harder for him/her in that now, since they stiffed you and you put the word out…now they have to go do all the footwork themselves, since noone is interested in finding deals for him/her.
make sense?

Well, if it happens then it happens. Majority of investors won’t do that because the ‘X’ amount is not worth losing a good bird dog relationship. If the price of finding a good investor to work with means you will lose a deal or two, then oh well. There are many other opportunities out there. Your other option is to wholesale the property rather than bird dog it.

Just a heads-up. Bird dogging carries a $1000 fine in Texas. The only way to legally pay a referral fee is if both parties hold real estate licenses. The other legal option is to make them a principal in the transaction.

Actually, most states have stiff fines for accepting birddog fees, but it ain’t the investor who gets bit. I always put my birddogs in the game as a principal to keep it all aboveboard and legal. Doing so also gives me a vested set of eyes and ears looking after our investment, since they’re getting another big paycheck at the end. Win/win? The only way to conduct business…

I modified my last responce completely, because something just occured to me

I plan on making a business out of bird dogging and operating as an independant contractor, more or less, for the investors I would work with.
I believe operating like this would keep you out of the radar then just say…going out, writing down a number for an investor and then giving it to him and walking away with cash
When you make youre own business out of it, pay taxes and the whole 9…well, then I would think thats a whole different ball of wax

Most investors won’t allow you to be a principal, but here’s something you’ll be able to do to protect yourself:
Write an assignable contract and put up the consideration from your own pocket. POOF, you have equitable interest and have status as a principal.
I make my ground partners put up sweat equity. Their sole function in life is to take direction from me until the deal’s done. They retain a 30% Net interest in the deal for allowing me to abuse them, run their tails off, make them money and provide the education. They forfeit everything if they don’t see it through. Some speak well of me, other’s don’t…generally the one’s who thought I was joking about their level of involvement. The one’s who speak well of me have made some good dough they would have otherwise lost out on, go figure.

BTW, when I get to the point I want to sell books and tapes, it’ll cost a lot more than sweat equity. :wink:









David: is your Non-Circumvent Agreement designed for birddogs who just give you names/addresses? If so, may I ask what’s in it?

I want to give peace of mind to those guys because I’m starting to recruit them. As a wholesaler myself, I can’t afford a lot of contracts, or to split my own take that thin on multiple assignments. But I’ll be damned happy to shell out $500 of my own fee when title cuts me a check for my nominee form.

My go-to guys did that for me when I was a birddog. I’d feel like I was getting somewhere if I could pass the favor on. :slight_smile:

Everyone: as to finder fees being illegal, here in AZ I’ve been told by a RE atty that Realtors can’t pay them, but investors can pay or accept. And lord knows we do. If it’s illegal here, I’d sure like to see the chapter and verse that says so.

David any chance you could post a copy of a solid non-circumvent agreement that you would feel comfortable signing if a bird-dog presented it to you?

Thanks Luxx

I wish I could copy and paste something, but I just don’t keep 'em after the deals done…Sorry. Maybe someone else has one they could share??

Umm, requiring investors to sign an agreement is a little silly, in my opinion. Maybe you can force them to pay you, but at what expense in time? If you spend 20 hours fighting the investor over it, you’re not only doing something extremely stressful, but you’re diluting your hourly pay.

Besides, the real estate industry LOVES to blacklist someone when they hear about them screwing anyone. Rather than suing them, just tell everyone in town and ruin their reputation. It’s much more satisfying. Last year, my father took out a full-page ad against an investor in a major newspaper. It cost the investor a $20 million deal and bankrupted him.

Anyway, maybe you’re not the vindictive type. The best solution is to only work with people you trust. You might get burned eventually, but in my experience, it’s fairly rare. You’ll also avoid the reputation of being litigious.

I generally agree, and haven’t been burnt either.

But my idea is to give the birddogs extra peace of mind. It is, after all, a signed agreement. As such it gives them some extra ability to take action if they ever need to.

No, they won’t need to, but I could SAY that until I’m blue in the face. I’d just as soon make a tangible gesture.

I don’t have a problem with making/signing agreements, so long as they are favorable to BOTH parties. Protection is paramount. The only problem I would have is if they made me sign a non-compete. I would want to work with several investors simultaneously, just in case one or two of them fell through, I would have a backup. Hey when it comes to money - TRUST NO ONE. I’ve been burned too many times myself. One thing that I will say however, I will still protect the interests of my clients. If one wants to know what the other is doing, I say nothing and protect them…protects me as well. Everyone gets their own separate deals from me too. I NEVER give out the same lead twice.


I am new to the rei game and would like to start out bird dogging, I would like to get as much info. as i can on bird dogging. ??? thanks mark in nor cal

To be a successful bird dog, you need to locate investors and find out the type of properties they want. You can find these investors by calling the “We Buy Homes” ads in the newspaper, by joining the local investors groups, or by placing an ad in the newspaper. When you talk to them, let them know that you find investment properties and looking for a bird dog fee in exchange and would like to know their criteria.

Once you know what your clients want, you will be in a better position to find buyers who will pay you your fee. Now, you need to start looking for bargains and run “we buy homes” ad in the paper, or drive around and locate vacant houses.

Some investors will be ok if you find them the contacts or addresses, others will want to know the property price and how much repairs it needs.

Personally, I believe that the biggest challenge, besides finding the properties, you will find is establishing the market value of the property.

thanks fadiz for the info its a big help

i utilize a basic “finder’s fee” agreement with basic language stating the investor found out about the property in question from me and make the investor sign in before i give him the address.

my current investor’s sign a blank form because of the volume of homes i refer to them.

Hi Westdanny,
that is a common question, and I used nothing, i never got burned cause i only did two 'dog deals then began wholesaling because I was sharped by that time.

if they burn you you dont bring them any deals, I have done about 115 house the past 30 months and never has that happened, but it can and does, thus I put them on a black list and whatch out for them next time, and I let all my contacts know the story and we all stay away from them, then there world gets pretty darn small.

had one guy hold me up at title when I was new and scared half to death of this biz, guess how many of then next 60 houses I wholesaled he got, the big doughnut, zero, zilch, nada.

last i heard he was trying to borrow money from a contact of mine who he did the same thing too.

what comes around does go around.