'Bird Dogging' or selling leads

6 Replies

Hello,

I am in the process of setting up my house flipping business, and have been doing a lot of research on which avenues to pursue when starting out. Wholesaling is obviously one,  and another is 'bird dogging', but there seems to be a lot of controversy on this subject as to whether it is or is not legal. I can't seem to find any definitive answer. I know that it appears to vary state by state, but even reviewing individual state policies, it continues to be cloudy.

With all do respect to everyone out there, I am not looking for opinions, but someone with actual legal knowledge as to the legality.  I am not a realtor, but I want to start my business off on the right foot. However, I do not want to shoot myself in the foot by eliminating a possible avenue of pursuit.

Thank you, and my best to all.

You are asking for a definitive answer to a legal question you have. Unfortunately, this social media web site dedicated to real estate cannot provide you an answer to your legal issue/question. I would suggest a local attorney well versed in your state's interpretation of 'bird dogging' (or 'finder's' compensation) and 'wholesaling' (routinely called unlicensed principal 'brokering' by some).

While I appreciate the advice, I am well aware that a real estate attorney in my state (IL) should be able to answer my questions. However, since the legality of real estate investing strategies is a part of the real estate investing process, I believe that it is an appropriate question for this site. I also believe that too many people are approaching the House Flipping business 'willy nilly' and should be well versed in the legal requirements and stipulations that come with operating a successful, responsible business. It would be my hope that someone from Illinois would be able to answer my question based on their actual experience, whether good or bad, so that the answer may benefit all.

Thanks.

@CJ D. :

 Are you a licensed Real estate Professional? When you say flipping business, are you rehabbing the properties or are you wholesaling/wholetailing these properties? 

Wholesaling is not illegal in Colorado ( I realize you are in Illinois) so long as the contract can be made assignable and the the buyer/ wholesaler has provided the proper disclosure as to their intentions in taking the property under contract. More importantly, they must be able to perform on their action, which is if they say they will close and pay cash in (x) time frame then they will execute on their contractual duties. 

    Having said all of that, you should still consult with an attorney not necessarily to discover the legality of the practice, but to find out the proper procedures and make sure that you are protecting yourself from potential lawsuits. I hope this is helpful. Cheers!

Stuart

I am NOT a professional realtor at this time, but I do intend to get my realtor's license in the near future. Wholesaling is legal in Illinois as well. My question is not about Wholesaling, but about 'bird dogging', the act of selling leads, rather than assigning properties. While I intend to pursue the Wholesaling avenue, as well as the Retailing avenue in my Flipping Business, I need to also know whether or not it is legal for me to sell any leads that I may run across, out of my normal work area, to other would be Flippers. Thanks.

From my understanding, the only regulation is that a licensed person cannot pay a referral fee to someone who is unlicensed. I have not come across any prohibition for two unlicensed persons dealing with a referral from one to the other. 

Thank you, Jerry. That helps!

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