Bird dogging for seller

Real Estate Agent · Atlanta, GA · Member since 2013 · 46 posts · 34 votes

Hi, I'm working with a hedge fund that is buying properties that meet a certain criteria, I'm also working with a seller that has so many properties (30+) that meet that criteria. My seller though, prefers to work directly with the buyer, so what kind of bird dog/referal fee like agreement could I arrange with the seller to put him in contact with the buyer. Also what do you think is a good fee for this. Thanks - Jordan

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Tim G.

Rental Property Investor · San Diego, CA · Member since 2011 · 1k+ posts · 1k+ votes

13y

This is often discussed topic here, like everything else. Truthfully the search feature would probably find us an identical post like this with the discussion going sideways by two parties who aren't even the person who posted it.

What do they say, it's not "the" way its "a" way. Do what works best for you and how you feel comfortable working. We can debate it endlessly here but it won't change anything. You could be writing an offer or calling a lead right now instead... shoot so could I.

I always say I have partners who fund the deal, I find it they pay for it we rehab it. It also works to your advantage because you can get super creative with the seller from this. I am working a deal now where the seller will hold the property while I rehab and we will split any proceeds above an agreed upon price. This means I can flip a house without paying for it, only the construction costs and make the seller more money.

Million ways to do it, I see no issue with having a funding partner and I do think its a bit unfair how hard everyone is on new wholesalers here. Yes we all sucked at first and made poor moves and learned from them. But the fact is I don't like the idea of newbies being scared out of this business by all the fear that is placed on them by others. Go out, break some pots and do the very best you can to be considerate of the seller and you buyer. This is a learning process.

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Cameron Ellis
Investor · Memphis, TN · Member since 2013 · 171 posts · 49 votes
13y
I would personally do a purchase contract on all 30 properties with a clause of with my partners approval. And assign those contracts to a hedge fund. I have 40 properties in Memphis, and I am currently looking for a hedge fund company buying in my area
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Tim G.
Rental Property Investor · San Diego, CA · Member since 2011 · 1k+ posts · 1k+ votes
13y
This is the #1 rule in wholesaling.

"When you add value, you'll get paid"

If the seller can sell these on his own you might not be able to, also if the seller is not motivated but "Will sell, for the right price" you might be barking up the wrong tree.

Either way, best to just level with them and explain your intentions and they are obviously in the business themselves. They will understand if you can add value you get paid, just agree on a rate or value and start selling. This is really a sit down with you and the seller, I would suggest half of what a realtor would charge in commissions.
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Jordan Robinson
OP
Real Estate Agent · Atlanta, GA · Member since 2013 · 46 posts · 34 votes
13y
Originally posted by Cameron Ellis:
I would personally do a purchase contract on all 30 properties with a clause of with my partners approval. And assign those contracts to a hedge fund. I have 40 properties in Memphis, and I am currently looking for a hedge fund company buying in my area

Thanks, and i may know of a hedge fund that might be interested.
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Curt DavisBusiness Member
Flipper/Rehabber · Memphis, TN · Member since 2008 · 5k+ posts · 2k+ votes
13y
Hedge funds are mostly working with full service companies who already fix and manage the homes. They are not buying from the guy who just knows someone who has a bunch of junk for sale.

@Cameron Ellis my questions is, what person in their right mind would let you put 30 homes under contract when they know you could not close on them? No one is going to let the " subject to my partner approval " and give you the option to back out? They would also require a hefty earnest money deposit.

Bird Dogs take note, if you do not have access to funds to actually close on a property, don put it under contract with a seller unless you tell them up front you are trying to flip it. Dont give someone false hope hat YOU are the one buying and then back out with some bs partner approval garbage.

@Jordan Robinson You need You run the high risk of being cut out of the deal. Also understand that if you are not a licensed RE agent you are legally not able to make an money in a referral situation. The only way you can is if you put the property under contract and actually sell it but getting the seller to agree to this is very difficult. Good Luck
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Bill Mitchell
Mansfield, TX · Member since 2013 · 207 posts · 26 votes
13y
@Tim G. Hey Tim, I was wondering in your opinion we as wholesalers can add value. To me its really built into the idea of wholesaling itself. If your lead is motivated, we should automatically add value to them because it is cash offer as is, and we can operate on a time frame realtors could never perform on. But it all comes back to that lead being motivated in some form or fashion it seems.

Other than that I have a buddy who wholesales but also has his license. He adds additional value by giving them the option of listing it as well.

Love to hear what you have to say :)
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Bill Mitchell
Mansfield, TX · Member since 2013 · 207 posts · 26 votes
13y
@Curt Davis Even when I am wholesaling I ALWAYS tell the seller I am the buyer. I think many of the successful wholesalers around here do the same. Only in a few instances have I said anything about a funding partner, that is if I am unsure of the area, the numbers etc.

At the end of the day, if you tried your hardest and were unable to move the property. You have nothing to be ashamed of, thats what option periods are for, to be exercised. And if you tried your absolute hardest, and couldn't move it and have to exercise the option there is no shame in that.

This is especially true when you first start wholesaling. You are new, dont have a ton of experience, its a scary thing to jump into even if you have some RE experience under your belt. If you go around being unsure, not confident and saying "let me try to wholesale your house" your not going to get anything under contract. Be confident, do your due diligence and if you are fairly confident you can perform, then act as such and go get it. That perfect first wholesale deal rarely presents itself, so take action and jump in.
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Curt DavisBusiness Member
Flipper/Rehabber · Memphis, TN · Member since 2008 · 5k+ posts · 2k+ votes
13y
@Bill Mitchell All I am saying is be up front with these people. If the deal was good enough for you to put it under contract then you should close on it when your contract closing date expires. I agree with getting the longest possible option period but imagine how the home owner feels when you back out without giving them the real reason for doing so.

Call me biased as I dont have to operate like this. When I put a home under contract I close on it every time. I understand this is how its done when you dont have any money or private lenders to use.
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Bill Mitchell
Mansfield, TX · Member since 2013 · 207 posts · 26 votes
13y
Originally posted by Curt Davis:
@Bill Mitchell All I am saying is be up front with these people. If the deal was good enough for you to put it under contract then you should close on it when your contract closing date expires. I agree with getting the longest possible option period but imagine how the home owner feels when you back out without giving them the real reason for doing so.

Call me biased as I dont have to operate like this. When I put a home under contract I close on it every time. I understand this is how its done when you dont have any money or private lenders to use.

Hey Curt, I respect your opinion and input just want to address that first.

This is how I handle it and it works great for me and on the one contract I ever terminated it wasn't a problem for the home owner. This is what I say from our first contact I try and set expectations "I can't buy every house I look at, sometimes I buy them for myself (true), sometimes I work with a funding partner (aka wholesaling also true), sometimes I am unable to purchase it at all (true)" All of these are true statements.

If its a property I am sure I can close on, I am the buyer period.

If its a property I am too unsure of, then I let them know. I am confident at the numbers we negotiated we can close. I let them know in these cases I need to get a funding partner on board and I am confident the deal will close, but its not a 100% certainty. So the seller understands. Recall I had already mentioned the possibility of using a partner from the get go, so this isn't coming out of left field

In the one contract I did terminate I did everything possible in my power to move the house it didn't happen I had to terminate. Seller still appreciated my effort, but ultimately was not willing to lower the price. I had already lowered my assignment fee to near nothing.
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Tim G.
Rental Property Investor · San Diego, CA · Member since 2011 · 1k+ posts · 1k+ votes
13y
Am I the only one whose "BS" alarm goes haywire when you hear these two things.

"Bulk Package" & "Hedge Fund" - I want someone to show me proof they have purchased of sold a bulk package. I've never met one person yet.
1 Reply
Tim G.
Rental Property Investor · San Diego, CA · Member since 2011 · 1k+ posts · 1k+ votes
13y
This is often discussed topic here, like everything else. Truthfully the search feature would probably find us an identical post like this with the discussion going sideways by two parties who aren't even the person who posted it.

What do they say, it's not "the" way its "a" way. Do what works best for you and how you feel comfortable working. We can debate it endlessly here but it won't change anything. You could be writing an offer or calling a lead right now instead... shoot so could I.

I always say I have partners who fund the deal, I find it they pay for it we rehab it. It also works to your advantage because you can get super creative with the seller from this. I am working a deal now where the seller will hold the property while I rehab and we will split any proceeds above an agreed upon price. This means I can flip a house without paying for it, only the construction costs and make the seller more money.

Million ways to do it, I see no issue with having a funding partner and I do think its a bit unfair how hard everyone is on new wholesalers here. Yes we all sucked at first and made poor moves and learned from them. But the fact is I don't like the idea of newbies being scared out of this business by all the fear that is placed on them by others. Go out, break some pots and do the very best you can to be considerate of the seller and you buyer. This is a learning process.
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Bill Mitchell
Mansfield, TX · Member since 2013 · 207 posts · 26 votes
13y
Go out and break some pots. Awesome post and quote, couldn't have said it better myself.
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Cameron Ellis
Investor · Memphis, TN · Member since 2013 · 171 posts · 49 votes
13y
@Curt Davis don't speak for everyone curt, I am working with a investor with 70 properties 35 of which I have under contract with the same clause I stated. I wouldn't consider a $475 earnest money deposit to hefty. But hey, that may be my investor and I relationship since he is my mentor. But anything is possible it just depends on your experience and how motivated the seller is..
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Cameron Ellis
Investor · Memphis, TN · Member since 2013 · 171 posts · 49 votes
13y
@Tim G. Land smith of San Fran and Precise Associates are 2 of the companies that have shown interest in my package and also have provided LOI's... Neither were accepted but their is proof that those companies are acquiring bulk packages throughout the web
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Tim G.
Rental Property Investor · San Diego, CA · Member since 2011 · 1k+ posts · 1k+ votes
13y
I want you to get this my friend, I really do.

I asked for proof of a sale, not interest.

Go get em!
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Curt DavisBusiness Member
Flipper/Rehabber · Memphis, TN · Member since 2008 · 5k+ posts · 2k+ votes
13y
If the guy is your mentor and he is letting you try to flip them that's great and I hope you flip all of them.
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Dean Letfus
Specialist · Memphis, TN · Member since 2012 · 1k+ posts · 1k+ votes
13y
Hedge funds will buy from anybody. They partner with a specific company in their area but go and sell to them. We work with hedge funds in Memphis, they buy anything from anybody that meets their criteria.

The benefit to you is a hedge fund will give you their max buy price so you instantly know if you can create a margin between your vendor and the funds.
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Melodee Lucido
Real Estate Investor · OR · Member since 2012 · 390 posts · 133 votes
13y
Originally posted by Tim G.:
This is the #1 rule in wholesaling.
"When you add value, you'll get paid"

If the seller can sell these on his own you might not be able to, also if the seller is not motivated but "Will sell, for the right price" you might be barking up the wrong tree.

Either way, best to just level with them and explain your intentions and they are obviously in the business themselves. They will understand if you can add value you get paid, just agree on a rate or value and start selling. This is really a sit down with you and the seller, I would suggest half of what a realtor would charge in commissions.

This is so well said Tim. It is the heart of wholesaling. Find a motivated seller and add value.

I have worked with these kind of packages and the "sellers" of them and have come to the conclusion that I can make a lot more money with my "smaller" deals. The sellers of these are usually NOT motivated, are over priced and arrogant. Life is too short for that kind of nonsense.

I have a steady stream of deals closing every week that make me and all involved happy. I now have repeat sellers and referral from people I have worked with. It is so much fun!

I have stopped wasting my time with the "BIG" deals-----though they do fall in our lap sometimes : >

Best to you Jordan on your journey.
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