I have a couple of questions that i need answered??????

Bird Dogs, Wholesaling
1

Okay guys i have 2 questions for you guys.

scenario 1.
I have a Realtor that has a newsletter that has his client’s wants. I found properties for those wants and spoke with the Realtor today. He said great and the magic question “WHAT ARE MY FEES?” Since i’m a newbie and this was my first time discussing fees with anyone i said 500 because i’m new and i was nervous. So he says "Let me get this straight (i was thinking oh what did i say wrong), you find my client’s properties and i pay you 500 per lead when the deal closes and i said yes as confidently as i could. He said GREAT and he’ll make up a contract and send it to me tomorrow. Now before i spoke with him (with all my courage built up) I thought to myself, "Okay when i talk to him i’ll tell him my finder’s fee is 10% of his commission. EX. If the house sold for 150,000, he would receive 9000, and i would get 10% of that which is 900. Well when i actually talked to him i froze up and just spit out 500. When i got off the phone with, i started to look at the properties i found. I took one which he’s looking for a Lake Tarpon Home with a dock(if possible) 700k. Well i found several and started to do the figures. One is for 699,900, 6% of that is 41,994 for the Realtor , and that is just 500 for me when it could be 4199! Now i don’t know if i’m missing some things with my figuring or if i’m doing it completely wrong (please correct me if i’m wrong) but that’s a big difference. Now since i’ve already said 500, i don’t want to burn my bridges with people and create bad business but that’s alot of money to me! Please let me know your thoughts about this because i’m new to this and i don’t want to mess up any potential good business relationships.

scenario 2.
I was on craigslist in the apartments wanted section. I saw that there are tons of people looking to rent apartments and houses whether they are relocating or not. Well i put an ad there for people needing help locating properties, i will do it for them and i charge a finder’s fee. I was thinking something like a deposit of $50 and another $100 when i find the apartment.

  1. Is this a good fee?
  2. What do i do if i can’t find the apartment or they don’t like any of the ones i present to them, something to protect me and give them adequate time to find a place. (deposit returned)
  3. Some one replied and asked me for a break down of my prices i was gonna email back $50 deposit and 100 afterwards but then i asked myself the previous question and SHE also asked if i did background checks, etc. Well i didn’t really think about that or anything else really, so are there any other things that i should be doing and what would your break down be?

I would really appreciate your thoughts and ideas about my situation. Thank you in advance for reading my post and replying!!!

2

Scenerio 1:

First, if all you’re doing is putting two parties together in order for them to work out a deal, then getting a finder’s fee of $500 is in line. Don’t get greedy.

Second, if the agent has agreed to pay you $500, I’d take as many as I could to them as quickly as I could because what he is doing is a violation of the ethics code and probably illegal (depending on state laws). A Realtor cannot pay a nonlicensed individual a finder’s fee, period.

Scenerio 2:

A bit more of a gray area, but most likely would be construed as acting as a RE agent without a license, which is bad.

Raj

3

I appreciate your response RAJ. I think i will go with the agreed 500. I’m trying to understand how is it illegal? Is it the same as me bird dogging for an investor. Yesterday on the phone he said i’m a property locator consultant. I just find properties for folks for a fee right? I don’t want to start off anything on the wrong foot or do anything illegal but i thought that was what bird dogging was about. I will leave the gray area that you mentioned alone with the apartments because i’m not a licensed realtor (as you can see), i just wanted to send properties people’s way for a fee. Thank you for your response and can you please clarify the illegal part on my behalf or his?

4

Whether it’s actually a crime or not will depend on your state’s laws concerning agency. I’ve reviewed several states and I’d guess that it probably is because as mentioned, licensed agents cannot pay non-licensed people a finder’s fee. Illegal or not, it is still against code of ethics and the agent could lose their license for doing it.

Of course, that’s his problem, IMO (he should know better anyway). What you need to do is learn whether or not it will affect YOU. If not, take as much of the money as you can before he loses his license. May happen fast. May never happen.

Raj

5

It looks like the agent is paying you as a birddog. Getting a $500 is very good, so you should take it every chance you can.

As far as how much the agent gets paid, don’t go by the 6% figure. The 6% is what the seller pays the listing agent, who has to split that with the buyer’s agent. The buyer’s agent then has to split their 3% with their broker. Depending on what the arrangement is, that can be as much as 50%. So that buyer’s agent is getting anywhere from 1.5% to maybe 2.5%, and that’s before taxes! Also keep in mind, that not all properties will pay a 6% commission, some will pay less.

If your agent is the listing agent, they’ll gross the 6%, but they still need to split it with their broker before they get paid.