I am confused on what wholesaling and bird dogging is…Is this illegal in Texas? Where do you start?
The way birddogging is often practiced, with no RE license and payment at close of escrow, could be considered in most states as practicing RE without a license. Paying a referral fee for every referral is not, but what investor in his right mind will pay that?
Because the investor is a principal in the transaction, he’s clear. It’s a conundrum, for sure.
One way I get around it is by making my BD’s a principal in the deal, for two reasons really;
- They’re completely within the law and
- I have a vested set of eyes and ears on the ground, allowing me to do deals outside of my backyard.
I give up some profit by doing it this way, but it takes the worries away. I also end up being the first call a birddog makes when they run across something, so it pays dividends in the long run. I’m sure there are other ways to legally accomplish the same objective that we’ll be hearing about.
Why should your birddog show up on the settlement sheet UNLESS he’s already a principal or otherwise directly involved?
And if he doesn’t show up on the settlement, how would anyone else know about your very private arrangement with him in the first place?
A birddog is just a lead source, and that’s where it ends. You pay him out of pocket and behind the scenes when you close the purchase of the property he alerted you to. Or even pay him before that, if you like. He doesn’t represent anybody, advise anybody, write contracts, or sign closing papers. He does nothing that a Realtor does, he’s completely invisible, and any agreement is only between you and him.
I can’t begin to imagine why he would be part of a paper trail in the first place, which would then make it necessary for him to become a “principal” in the second place.
Maybe we’re not on the same sheet here.
But yes–if your birddog is declared as a closing expense like a realtor, then it would certainly look like he’s acting as one but without a license. He isn’t, but his role would understandably be questioned.