BiggerPockets

Hi Will,

The main reason that investors use bird dogs is that they are basically free or very inexpensive labor. It is like hiring a commission salesman. Some bird dogs are lead generators; some are paid only if they bring a deal that the investor closes on. It is also better to have five people looking for good deals instead of just one.

I don't know of any investor who pays a bird dog for an MLS lead. There is no reason to do so. If a deal is in the MLS, a real estate agent is going to get a commission. Most investors have their own real estate agent looking for great MLS deals for them (or they have access to the MLS themselves). Why pay an extra fee?

The real value of a bird dog is that they can find either the specific type of deal an investor is looking for or deals that others don't know about. We are in a sellers' market right now and some people wonder why an investor would use a bird dog. But with so many people upside down in their houses and/or behind in their payments, true good deals are not as easy to find as an outsider would think.

Bird dogs turn in all levels of leads, from something as simple as an address and a few notes on the property to more detailed information such as the address, the owner's name and address, pictures of the property, and any other data on the property such as info from the tax appraiser's or tax accessor's sites. If the bird dog is working as a lead generator, he may be paid varying rates depending on the depth of information and whether or not the investor closes on a deal.

Can a bird dog just go through websites and find deals? Possibly. Most investors would rather spend their time negotiating deals instead of doing administrative work. Frankly, I can pay someone $10 an hour to do that; it is not something I would pay a bird dog for.

If you are going to bird dog, you need to first check the laws in your state to see if you can legally accept a fee for finding properties if you are not professionally licensed for real estate. There are legal ways around this, most notably putting a property under contract and assigning a contract.

I think bird dogging is one of the best ways to learn if real estate is the business for you. Of course, I am a little prejudiced -- I wrote an ebook on bird dogging. But, you can learn the market, make money without having to invest much more than your time and establish contacts with other investors who you can learn from. Give it a try.

Best of luck to you,

Barbara

I need to clear up some basic confusion as to how "leads," potential properties attractive to investors, are generated. First off, why is there such a need for bird dogs or jobbers (I read theyre virtually the same thing) if people can just browse websites? Its relatively easy I'd imagine to for an FSBO seller to post their property on a website. And real estate agents have even more latitude with the multiple listing service (MLS).

There is no "need" for birddogs. In fact, I don't know a single investor that uses a birddog, unless you're calling real estate agents and friends birddogs. That's not to say that I wouldn't buy a deal if a birddog brought me one. On the contrary, if a birddog brought me a property for 30 to 40 cents on the dollar, I would buy it. However, I don't need a birddog. To date, I have found dozens of deals on my own and they keep coming even without me doing any work. You see, after an investor gains the reputation of being someone that can actually close on deals, people call you with deals. So, the burden would be on the birddog to find the great deals and bring them to me. Finding great deals by browsing websites has never been a method of being successful. The truly good deals are found through personal contacts, whether those deals are found by the investor or a "birddog".

In this market, I won't even consider looking at a property unless it can be bought for less than 50% of the current market value. This is a high risk market and the economy is in the tank. Successful investors will not pay anything close to retail for a property in this market (or any other market). You aren't going to find great deals browsing websites. It will require a LOT of work to find the kinds of deals that successful investors will buy.

Good Luck,

Mike