Pursuing Bird Dogging Legally

90 Replies

  Hi everyone, my name is Michael and I'm a 15 year old from New York. Over the past year or so I've been trying to get into real estate but there's always a problem with either the strategy or my age. I looked into BirdDogging in the past but there were two main problems that I came across:

1) The legalities of it 

2) Ensuring that I get compensated for my work

  So I've been thinking day and night on ways to get around these roadblocks and I think I came up with a good method and I will share it with you guys with hopes that you guys will be able to tell me wether or not this will work and if it's legal.

   According to the RESPA law people bird dogging can't get payed a commission or fee after a deal closes because you have to technically be a licensed  agent or realtor in order to get payed like that. So this would make getting payed as a bird dog once a deal is closed illegal. 

So I was thinking and searching around for ways to get around this as a bird dog and this is what I came up with (and this may be wrong that's why i'm asking you guys). So what I would pretty much do is get payed on a per lead basis regardless if they close on the deal or not. I would get skip traced leads and I would either call them myself or get a VA to do it for me. Then if we find a person who is interested in selling I would get some general info about the property and leave the negotiation, due diligence, etc all up to the investor, I would provide the investor with general information like bed/bath, repairs needed, condition, but not information like the address or phone number yet. So from there if there's an investor that is interested in learning some more about the property I will get an NDA to make sure that I get payed and everything goes smoothly. I saw online that even though i'm still under 18, I can still sign an NDA. So in the NDA we would agree that I would get payed X amount when I provide the information on the lead to the investor (Keep in mind that these are leads that would be willing to sell, not just any random lead). This method would keep me from breaking any laws and it would ensure that i get payed when I'm bird dogging.

  From what I know (which isn't much) this would work and be legal in New York and New Jersey, I will also make sure that I get payed with the NDA, and this will all still work given that I'm a minor. Let me know what your thoughts are on this method and wether or not this would actually work and if it doesn't what I can do to get around this considering the conditions I'm under. Thank you in advance for all of the help, I really appreciate it!

@Account Closed You certainly can run a lead generation business without running afoul licensing laws. You will however need a parent or guardian to enter into any contracts on your behalf until your 18. You also need to be careful of violating the Do Not Call rules since you plan on calling them.

I have heard of a telemarketing business in New York that runs surveys and sells the leads to realtors. Their survey goes something like this

"Hello, this is Michael with New Yorker Surveys. We're conducting a survey of home owners in your neighborhood today, do you have a moment to answer 3 quick questions for me?"

"Sure."

"Great! Do you currently own or rent your home?"

"I own it."

"How long have you lived at your current residence?"

"About 10 years."

"Do you have any plans to sell or move within the next year?"

"Possibly."

"Thank you for your time!"

They then send 3 of the 'possible' or 'yes' leads to local realtors as a sample of the type of leads they generate and offer to sell them a neighborhood of 2,000 houses which they will call through every 3 months for $500/month.

Hope that helps or at least gives you some additional ideas about the direction your business venture could go. And good luck!

Great question Michael. Its very inspiring to see someone of your age looking to get into real estate.

I think at this point you should speak with some investors and try to build a rapport. Just from your gut feeling and relationship with them, you can decide whom you want to work with

From an investors point of view, I can tell you that I would love to have someone like you in my team.  A smart investor should never hesitate in paying anyone or sharing the profit if someone can help getting good deals while saving some personal time. 

Sorry, I didn't answer your question properly but I am not aware of legal issues related to Bird dogging.

@Doug Pretorius so all of this sounds like a bulletproof business plan then. The only thing is the contracts. What contracts would I need then to ensure that everything goes well? Will an NDA be enough to ensure that I get payed and everything runs smoothly or will I need something else? Also, I thought I can sign those contracts as I minor (I read that online). Thanks for your contribution!

Abhijeet Parihar thanks for the support, I will definitely try that out! Also for you and
@Doug Pretorius how much should I charge per lead? I was thinking if I already knew everything about the property and I knew the seller would sell I can sell each for a few hundred dollars if not more depending on location and everything. What are you thoughts?

@Account Closed Technically a minor can sign a contract, but it's not binding.

You can try to sell them for whatever you want but there's almost zero chance you will be able to sell a lead for hundreds of dollars. One of the biggest real estate lead generating companies in the US is Zillow and they charge $5-$50 (probably varies by the value of the property) per lead.

The company I mentioned sells the service of telemarketing an entire neighborhood. That way their income is steady and isn't based on how many leads they generate. Calling 2,000 numbers and conducting a simple survey should take 1 person about 30 hours. So you pay a VA in the Philippines $5/hour. That's $150. And you're charging $500. That's a solid mark up for a service business.

As for ensuring you get paid. Simple, get paid in advance. That way it's like any other marketing the investor/realtor does. They pay for the ad (in this case, the calls you will place) and afterward they get the leads emailed to them.

Finally regarding the contracts you need, whether it's a service contract as I'm suggesting, or a contract for selling individual leads. You'll need to talk to an attorney that specializes in business.

@Doug Pretorius I will be in touch with an attorney then to go over all of the contract stuff and everything like that.

I was thinking of charging a couple hundred dollars per each lead because it would be almost like a bird dog fee from what I was thinking. I would be sending them to leads that are going to be selling now. I was thinking of doing it this way so that’s why I was going to be charging that way.

But doing it in more of an agency type of way (like you were mentioning) is also something worth thinking about too. I’ll have to think some more and see because who would be willing to pay some random person $500 a month for doing that and not guaranteeing anything. I was just thinking that if I sell on a per lead basis I may be able to build a reputation and then go into something like that this way people can trust me. Let me know if you think otherwise and on your thoughts about the bird dogging pay per lead method as well!

@Account Closed Here's the problem I see with that model. Let's say you can sell a "sell right now for a deep discount" lead for $500. When you mentioned skip tracing I assume you meant that you will be calling lists of people who are not trying to sell. Things like absentee owners, preforeclosures, recently divorced, etc. Yes? These lists typically only yield 1 solid deal in 1,000.

People like this are not expecting calls from numbers they don't recognize so you will only get about 15-20% pick up rate. So to reach 1,000 you need to call 5,000-6,500 valid numbers. Not all the numbers on the list will be working, so you will need to make more like 7,000 dials to reach those 1000 people. With a single line auto dialer like mojosells or phoneburner, you can comfortably make about 75 dials per hour. That's 93 hours of dialing to sell 1 lead worth $500, or $5.37/hour.

The reason you might instead want to focus on selling "thinking of moving" leads is that realtors don't require the property to be discounted. You're also able to sell tons of leads that aren't ready to list right this minute, plus buyer leads which realtors can also make use of. Maybe they want to buy or sell in 6 months or a year. Those are still good leads for a realtor. Those are leads you would have to throw away if you're only selling "gotta get rid of this thing!" leads to investors.

Basically "birddogging" is a great deal for the investor but a terrible one for the birddog. You work for free and they only pay if you find something really good, and to make it worse, some of them might screw you out of even that. That can't happen when you are selling a service upfront.

Who would be willing to pay you to do this? Lots of people. First, you send them a free sample of the type of leads you're selling. They can follow up with those and judge for themselves if they're happy with the quality. If they are they'll try you out. By signing up for a 3 month trial for example. If at the end they're happy with the results they will continue, if not they'll cancel, they've only spent a small part of their marketing budget trying your service out.

One final thought. The birddog method you're considering and the calling service I'm suggesting aren't mutually exclusive. You can do both at the same time to different lists and see which makes you more money. Call lists of absentee owners with 30%+ equity, while at the same time pick a neighborhood and call every house. Test different scripts. Figure out how to generate leads and then test out the different ways of selling them.

 Okay that makes a ton of sense to do the telemarketing service you're talking about then. So I'm just not too clear on how it'll work. You were saying that I would sell agents leads from people who are "thinking of moving", but wouldn't it be a service that I'm selling to the people though not a per lead thing then?

 Also how will the free sample and trial work then? I would have to give them all of that marketing for free? I don't really understand this, would I be selling per lead or for the service of calling the leads that I get? So how would the whole service work?

Another thing I wanted to mention was about the mojosells dialer. Will I need something like that for my VA and myself to use? Will I be able to track how many hours my VA is working and everything like that so I know how much to pay them? How does that dialer specifically work and what plans are necessary because I see that there's a ton?

@Account Closed Right, you'll be selling the service of calling a neighborhood and providing them with all of the leads you generate in that neighborhood for a fixed upfront fee. You won't sell individual leads. You can expect to generate 1 lead who is thinking about buying or selling for every 100-200 contacts. So if you sell a neighborhood of 2,000 homes your client can expect to receive somewhere around 10-20 leads every 3 month calling cycle. For you that works out to about $25-$50 per lead which is right in line with what other lead generators are selling leads for.

You're only going to give them 3 free sample leads so it's not a big deal. In sales this is what's known as a loss-leader, something you give away or sell at a loss to entice someone to buy something bigger. In this case, you take the loss of 3 leads in the hopes of landing a client who is worth $6,000/year for life.

OK let me break it down step-by-step exactly how I would do it.

First, I'd either sign up for mojo with 1 lead manager and 1 single line dialer. That's $99/month and includes an integrated CRM which is going to be very important for keeping your lists and leads organized. Or for a cheaper option I would sign up for unlimited US calling with Skype which is only $3/month and a CRM that integrates with Skype. A quick google search for "crm with skype integration" will give you lots of options. One I checked out was OnePageCRM which is $12/month with unlimited contacts (important for keeping costs down as you grow) and a 21 day free trial. 

Next, you need leads to call. Mojo has a lead store but it isn't that great. Here in Canada most mojo users buy their leads from telelisting. I don't know what an equivalent is in the US so you'll have to look that up, maybe listsource? I don't know if they sell phone listings. For Skype it's going to be a little more tricky, I have no idea if the CRM I mentioned allows you to import phone lists that you buy. Here in Canada I generate my lists for free using canada411 because I can look up all the numbers on a street with a reverse address search and the numbers are all click-to-call links in Skype. I don't know if there's a similar site in the US.

NOTE: Very important. None of these methods take the DNC into account. You have to be very careful to only do surveys and not attempt to sell anything during your calls or you can be fined heavily. This is another thing to discuss with a lawyer to make sure you're doing things the right way.

OK, so now that you have a list to call and a way to call them. It's time to hit the phones! I assume you are on summer vacation now right? So set aside some time every day to make calls. You need to do the calling yourself to figure out what works before you can think about outsourcing it to VAs.

Here's a better script than the one I gave you before:

"Hi this is Michael with Kantar Marketing. I know you are very busy so I'm calling just to ask you a brief two-question survey, the first of which is: Are you thinking of buying or selling your home?"

If no: "Thank you for your time!"

If yes: "And question two: When you say yes, do you mean in the next 90 days or more like 3-6 months?"

Regardless of what time frame they say, finish off with: "Would you like us to send you some free info about prices and sales in your neighborhood?"

That lead is now perfectly set up for an agent to follow up with a market analysis.

Once you locate 3 leads of people thinking of buying or selling you can start looking for clients. The easiest way I can think of to do this is to look up active agents in the area your calling and emailing them with something like this:

"Hi (agent) this is Michael with Kantar Marketing. We've recently started a real estate lead generation service here in Yonkers and wanted to reach out to see if you are in need of a steady stream of buyer and seller leads? As a sample I've included 3 leads we generated this week. If you like what you see contact me to discuss our lead plans.

Lead #1
Type: Seller
Name: Joe Blow
Address: 123 Main St.
Phone: 555-1234
Status: Requests market analysis for selling his home within the 3-6 months.

Lead #2
Type: Seller
Name: Jane Doe
Address: 321 Pine St.
Phone: 123-4567
Status: Hot lead! Wants to list right now!

Lead #3
Type: Buyer
Name: John Smith
Address: 999 Birch Rd.
Phone: 765-4321
Status: Wants to buy 2-family as an investment."

When you get someone who's interested in buying more leads explain that they can purchase neighborhoods of 2,000 homes each. You will call through those homes on a 3 month cycle. Cost is $500 paid monthly per neighborhood with a 3 month minimum contract, the leads you generate are exclusive to them. You also have a special right now, 6 months for the price of 5!

Send them the service agreement that you had your lawyer prepare and send them an invoice for the plan they purchased. I personally would use something like quickbooks or waveapps for the invoice so you can collect right in the email and have anything in one place for doing taxes at the end of the year.

Of course you should also get a website set up to do all of the selling, contracting and invoicing for you as soon as you can.

Finally, for VAs, the best calling solution is probably Skype. Most VAs already use it and it's cheap. You can monitor their call activity with Skype Manager.

@Doug Pretorius thanks for that in detail reply. I only now have maybe one or two more questions about this. For the VA and I, how would I make a database so we can write the details about the property into it? Also, how would my VA and I share it if I would be using mojo and the VA would be using Skype? Another thing I wanted to mention is would I be able to target investors as well as agents with something like this as well? It seems like this can work for both groups of people.

@Account Closed Your CRM is the database where you keep all the details about the properties and owners you're calling. There might be a way to transfer the data between mojo's CRM and whichever CRM you're using for skype. Or you could split it. Have all of your VAs use Skype with one CRM, and use mojo just for yourself. Most CRMs have great team collaboration features so you can keep all of your VAs activities organized in one place.

You might be able to offer the service to investors. I just don't know how much they would be willing to pay since they can only expect to get 1 or 2 good leads every 3 months.

@Doug Pretorius I think I just found a way to integrate both with zapier. I can just integrate both of those Crm’s through zapier! By the way, thanks for all of the help, you don’t understand how much of a help you were! I’ll definitely keep in touch with you to let you know how everything goes with this!
@Doug Pretorius it may just take some time to set everything up with this in order to get started. Also, I was thinking that I would need to save up some money to be able to start all of this (around 1k). What do you think about that, would I need more than that? Also, how long do you think it would take me to set all of this up then once I get the money saved up whatever that amount would be in order to startup. I would ideally like to start all of this within this summer though if that would be possible!

I solved this issue.  crm plus phones plus text plus voice blast plus email plus chat all within a single platform. 

Imagine calling someone with a click from you crm. 

Imagine setting auto responders on every inbound call.  Call text email 

Imagine calling all inbound prospects automatically using prerecorded messages. 

@Account Closed You're welcome, good luck with your venture! I think you can test things out on the cheap while saving up for more tools. If you start with skype and a CRM with a free trial you can literally start calling today for $3. The most expensive thing to start would be getting things squared away with a lawyer.

@Doug Pretorius yeah that’s why I really wanted to have the contracts in place first before I do everything and that would be really expensive for me. And yeah I can definitely do the Skype crm to begin with, I just need to get in touch with a lawyer right now and that’s what s going to be really costly.

@Eric Adobo He just needs to talk to them with his parents. I know of quite a few kids who built businesses from scratch and became millionaires before they turned 18. @Account Closed is obviously a smart kid and seems to have the tenacity to succeed.

I ran several businesses as a kid, although I don't think any of them made more than a few thousand dollars in a year.

@Account Closed Oh one other thing you might and to look into is called ecsow, it's an auto dialer that works with skype and other voip providers. It basically does what mojo does but for $10/month. The only thing I'm not sure of is how/if it can integrate with a CRM.

@Doug Pretorius thank you so much for, there’s always going to be people that are going k say that you can’t do something because of your age but I actually know minors who are making great money starting their own businesses as well. On another hand, would a contract and a talk with a lawyer be really essential for me to do in the beginning before I start or is that something I should make sure I do before I start the whole venture?