BiggerPockets

I have never used birddogs before, but I know a lot of investors have. Other than Cragis list or your local investors group, how can you find a good birddog? How much do you pay? Some say they pay a flat amount and some pay a percentage.

Sharon,

Once you find a bird dog ask them what they are looking for as a fee. If your comfortable with their offer then great, otherwise you negotiate with them.

We use birddogs all the time. We pay a percent of the profit, based on the work that they do. Obviously we pay a bigger percentage if they get the paperwork from the homeowner, etc. than if they just give us a name and phone number.

Generally we range from 5% to 20%. Most are at the 20%. We are flexible however based on volume, etc.

Hi Sharon,

I can give perspective on both sides of the fence as I started as a bird dogger.

My first birddogging expercience the investor offered me $1000 for any property I passed off that they closed and all I had to do what get what the homeowner owed and who the mortgage was with and name and address. In the first week, I handed over 9 referrals with that information. At that point the investor reconsidered their contract with me. The contract was COMPLETELY VERBAL.

I do NOT recommend that AT ALL. I was uncomfortable the whole time, but was so eager to learn that I never pushed the issue. I was paid on every deal with this investor. By the time we parted ways we were splitting the deals 50/50 because I had brought in so much business and got paperwork, met with BPO agents and did everything involved.

The second investor I bird dogged for I got 15% of the net profit. Here is where I will offer more advice. I had a one page contract that outlined how I would be paid on the 2nd closing within 24 hours off the net. I found out a couple weeks ago, that a house I got under contact for them was closed back in June. Now guess what? I had NO idea it closed and I was owed money. It wasn't until I saw a sold report in the local area and believe me I was upset. The one thing my contract lacked is what was to happen if I wasn't paid in a timely manner. IT SHOULD HAVE HAD AN INTEREST DUE after a certain number of days, etc., but in reality if push came to shov, it wouldn't have been worth me going to court, but my trust in the investor is gone.

Keep in mind, this investor also told me they did some rehab, but never provided receipts, so again, I had no way to verify what their actual net was.

I think trust is very important between a bird dog and the investor. My experience wasn't all that bad as I got paid, but certainly a learning experience.

Sharon and Maryann,

We have a 5 page letter of agreement with our "birddogs" which spells out what we expect, what our responsiblities are, what the compensation is and how it's paid. In addition, our birddogs are kept in the loop with a weekly update on the status of the short sale. I agree that trust is important, but I also think you need to have everything in writing. Along with the letter of agreement, I get a W2 so that I can 1099 the Birddogs at the end of the year. The agreement clearly spells out that they are an independent contractor.

Communication is key. We take good care of our "birddogs", and have even surprised them with an occasional bonus.

@ Jackie & @ Vickram -

I am a big fan of paperwork also. Everyone understands what is expected. I worked with one investor that wanted to even do contracts to purchase my house "verbally". I'm certainly not doing that.

On the other hand, I have been lucky to have been involved in some verbal agreements and they always worked out the way they were supposed to. I guess I was working with honest folks.

I will say that it makes me more than a little uneasy when people are against putting things in writing that we have verbally agreed on. That to me is a red flag.

Curt -

No crazy pills! We never pay birddogs on the HUD. They are paid out of our profit after the closing, and get a 1099 at the end of the year. It is all spelled out in our agreement.

Vikram - The birddog is the one who benefits from having it in writing. We are in control of the short sale process including the closing. Especially with short sales which can take 3-6 months to close, I think it is more comfortable for the birddog to have everything spelled out. If relationships and terms change, we just do a new letter of agreement. I agree, you can have a verbal agreement that works great, but you can also get burned. Having been on both sides of that, I would prefer not to get burned.....even once!

Ron,

I just sent you a PM.

Jackie

sorry im new to this site im interested in seeing what the bird dog agreement should look like and also im interested in offering this service in ri and mass