Paying Birddogs Finders Fees

6 Replies

I am looking into how to pay a birddog for referrals on properties. For example, if you are non licensed and receive compensation for referring a property to a buyer, but do not wholesale it and receive compensation inside or outside of the closing as a party with no real interest or contract on the property, what type of agreement do you use? 

Technically by Colorado law where I work, you cannot broker a deal or receive compensation for facilitating a real estate transaction without be licensed (finders fee). So If I do not lock it up under my company but simply refer the property to a buyer and receive a fee, I am illegally brokering?

Has anyone else specifically in Colorado or other states looked into this?

I'm in Texas and was concerned about this. Established investment companies told me they just pay cash under the table. I didn't like that idea because I'm sure ppl get away with it but that won't be a good defense in court if something goes wrong. I just put the bird dog on the contract with me and then when I wholesale it, we both get assigned our price. I'm still looking for a better way but haven't found it.

Hey @Roger Covin ,

I went to high school in Arlington, so just thought I would say hi!

Nonetheless, could you argue that it is a lead generation expense? Since they technically are not facilitating a transaction I don't see why it could be argued against in court.

@Roger Covin Problem with cash under the table is that you cant write it off and its definitely not the right way.. I've asked around and even my attorney doesn't have a great solution. Still researching and searching for what others are doing. 

@Jared Robert Steele @Kyle Doney this is a tough one. I've even been asked to be a bird dog by a few investment companies. But all they ever say is find the deal and we'll cut you paperwork, no written agreement, just verbal with the expectation of payment which leads me to believe that everyone is paying under the table. I would never bird dog though...If I can find the deals, why pass it off when I can market it

For now I'm just including them in the initial contract so when we flip it there will just be an assignment fee we split as agreed.