Bird dog contract?

[steve-homefree]

Anyone have a bird dog/investor contract that they would like to share?
You know,something that will secure the bird dogs finders fee.

Thanks in advance
steve

[k6saunde]

If I'm not mistaken it should be something that you could create yourself. The key points in the contract should include, something like this.......

On this _____day of _____________ in the year ________. (Name of Investor) herein referred to as "The Investor" and (YOU) herein referred to as "The Bird Dog" enter into an agreement for the sale and receipt of addresses of potential investment properties.

The Investor agrees to pay the Bird Dog the total sum of $_______ for each of the ___ address(es) and only the addresses listed below. The investor agrees to pay in full the total sum of $_________ to the bird dog upon receipt of said addresses in the form of (cash, casheirs check, etc.).

The Bird Dog agrees to provide the addresses of potential investment properties that fit within the predetermined guidelines set forth and agreed upon by both the investor and bird dog. The investor agrees the bird dog is not responsible for providing additional research or information reguarding said properties, unless otherwise previously agreed upon. The Investor agrees the bird dog does not warrant or guarantee the Investment potential, condition, or level of distress of any property. The bird dog agrees that by accepting payment in full he/she relinquishes all further claims both monitary and Non-monitary against the properties provided to the investor.

Property List:
1____________
2____________
3____________.....Etc.

Signed and Dated by both parties.

It shouldn't have to be much more involved than this. Now, my legalese may not be up to par but the general message is there. In any case have a qualified attorney (which I am not) review any and all contracts. Not all states are the same so there may be some requirements that I am not aware of that may need to be added.

Keith

[steve-homefree]

Thanks,Keith.
This is a large step in the right direction.

[ThreeRiversREI]

It shouldn't have to be much more involved than this. Now, my legalese may not be up to par but the general message is there. In any case have a qualified attorney (which I am not) review any and all contracts. Not all states are the same so there may be some requirements that I am not aware of that may need to be added.

Keith,

My biggest problem with the way you worded that (and I realize you're not an attorney and recommended people consult one) is that it appears to call for immediate payment prior to the investor determining if the property was even suitable, let alone if they would be able to reach an agreement with the seller.


To everyone,

I'm wondering if anybody has an example of an agreement that would acknowledge that a particular lead was given by a particular bird dog, but that reserves payment until if/when escrow closes on the property. And along with that, how would investors deal with bird dogs on creative financing deals (lease options, contract for deed, etc.) where title doesn't pass immediately but a deal has been reached & executed.

[k6saunde]

My biggest problem with the way you worded that (and I realize you're not an attorney and recommended people consult one) is that it appears to call for immediate payment prior to the investor determining if the property was even suitable, let alone if they would be able to reach an agreement with the seller.

Good point! I do think that in some cases the investor may need time to review the property and your information. If you are providing a portfolio on the property. But if all you are doing is providing an address and nothing else then why would I have to wait if it meets the criteria of the investor?

There are several ways a bird dog can get paid. I should have mentioned that in my post.

In my example I was approaching it in the way that I am just providing the address of potential investment properties. For just an address I would not be expecting a big paycheck for each address. I would however as I stated have to follow the guidelines the Invester (aka My Client) and I agreed upon. Which means that the property would have to meet certain criteria for it to be considered a valid address. So being paid at the time of delivery shouldn't be a big deal for the investor.

Now if I had done research on the property such as tax records, repair costs, current and previous owners, comps, List of estimated repairs and costs, etc. then I would want a much larger paycheck and on review one of two things would happen.

1. Have the investor sign a statement prior to receiving any information. This document would acknowledge he/she has received information from me listing the properties address. Have verbage stating that this property and information was NOT known to the investor prior to receiving the information I provided. The second clause in the contract would state, ."If the investor has deemed the property unacceptable for investment in any way shape or form. He/she or any representative of theirs will not purchase, lease, rent etc. the property listed herein. and if they do with say 6 months to a year of signing the release, that I would be paid my fee in full within 24 hours of closing." In addition I would give them 1 week to review and verify my information. If after the seven days the investor wants the property I would be paid my fee. If not then I am covered from them taking my info and not paying me for my work.

2. I would get paid on the spot. Yippie for me! I would have them sign a contract stating that the investor has infact reviewed the information I have provided and without further review or verification accept the information to be valid. Also that I am not entitled to any further compensation other than that previously agreed upon. And of course a break down of what I am providing and what I am getting paid for. Also a liability clause to cover my butt in case some of my info was out of date or incorrect, that I couldn't be held financially or personally responsible.

The problem is there are soooo many ways to bird dog for someone. Every investor is different. Some investors all they want is a valid address, then they do the rest. Others want a complete picture of the property. If all I am doing is supplying an address and nothing else. I don't see what's wrong in expecting to be paid at time of delivery. As long as the property is a valid potential investment that meets the investor criteria.

The main point here is not everyone is honest, investor or bird dog alike.

The thing to remember is, if a bird dog starts giving out bogus or useless addresses, everyone in the investment community will know very quickly. Which would put them out of business very fast. So as a bird dog it is in my best interest to do some preliminary research to determine if the property is in fact a valid candidate for one or more of my clients.

The key is to build a GOOD reputation among investors. If I do my due diligence and determine that the property fits in with what my client wants then most investors will not have a problem paying at time of delivery.

The Best advice I think I can give is to talk to a lawyer, have him draft a contract that covers you from being taken advantage of.

Keith

[ThreeRiversREI]

The problem is there are soooo many ways to bird dog for someone. Every investor is different. Some investors all they want is a valid address, then they do the rest. Others want a complete picture of the property. If all I am doing is supplying an address and nothing else. I don't see what's wrong in expecting to be paid at time of delivery. As long as the property is a valid potential investment that meets the investor criteria.

The main point here is not everyone is honest, investor or bird dog alike.

Well, I've been talking with my partner as to how we want to proceed with the people that have sent me private messages offering bird dog services around Pittsburgh. Her concern is being handed a list of addresses that may or may not meet any of our criteria. Paying up front means we get burned by each and every dishonest bird dog for at least that first bad list.

Then to, is the list bad because of dishonesty, or simply due to an honest misunderstanding about what we were looking for? Or maybe the bird dog understood, but overlooked some critical point that made the deal unfeasible?

Right now, we're leaning towards paying a referral fee upon consummation of the deal. And to avoid obvious problems with the deal (and limit the amount of leg work we have to do sifting out the chaff, thus the value of a bird dog in the first place) will likely ask not just for the address, but information from the county assessor's office as to value and owner history (including sales price); a fmv value (possibly pulled from a site like zillow.com); as well as a description of the sort of work that appears to be necessary (paint, landscaping, etc.) and whether or not the property is currently occupied. Of course, if the property is formally for sale, the asking price and listing agent, if any, would also be needed.

Most of that can be gotten between a quick drive-by and 5 minutes on-line, but helps make sure the property meets our needs of cosmetic improvements only with enough equity (as-is and after clean-up) to ensure being able to quickly turn the property in spite of a slowing marketplace. It will also help weed out random lists of boarded up properties, newspaper listings, etc. without some hope that they could actually meet our needs. Also, as payment would be deferred until we closed a deal, even bad leads that aren't immediately obvious can be weeded out and the investment community warned if a bird dog isn't being honest in their efforts.

That's just where we are in our thought process. Nothing written in stone yet. Though I expect to put up a preliminary request for leads on the Bird Dog and/or PA forums withing the week.

[k6saunde]

ThreeRiversREI,

Sorry don't know your name.....

Essentially your looking for someone to do all the background and leg work up to but not including working a deal with the owner and getting it under contract?

Did I understand correctly what you are looking for in a bird dog?

If so,

Here are my thoughs......

If a bird dog was going to do all that for you, why wouldn't they just make the deal with the home owner/seller themselves then assign the contract to a rehabber?

If your offering say $2000 for all the info (Finding the Property, Running Comps, Finding FMV, Estimating Repairs, estimating repair costs, Researching, the neighborhood, Property History, Owner History, Leins, Judgements, Taxes, Verify equity, etc.) it doesn't make much sence for the bird dog to give you all the research when for a little more work he/she can get the property under contract then assign it for $10-$15K or more for a $10 down payment.

If the deal is in fact a good deal why wouldn't the bird dog just take advantage of the deal him/herself after doing all the research?

I understand your concern about getting taken advantage of. Not everyone is honest. But the reason you meet with a bird dog in the first place is to iron out exactly what you are looking for.

Make sure there is a check list in place to reflect exactly what you look for in an investment property. Don't jump all in until the Bird dog proves him/herself a valuable asset. Ask them to find one property and one property only that fits your needs. If they do a good job ask them for 2 and so on. There is nothing that says you have to choose one right away. Once you build a relationship with them you will know that they are only giving you the properties that fit your criteria.

Keith

[ThreeRiversREI]

Did I understand correctly what you are looking for in a bird dog?

Apparently not.

If your offering say $2000 for all the info (Finding the Property, Running Comps, Finding FMV, Estimating Repairs, estimating repair costs, Researching, the neighborhood, Property History, Owner History, Leins, Judgements, Taxes, Verify equity, etc.) it doesn't make much sence for the bird dog to give you all the research when for a little more work he/she can get the property under contract then assign it for $10-$15K or more for a $10 down payment.

Joe BirdDog drives by 123 Main ST & sees a FSBO sign out front & notices the grass is dead & there's a rusting remnant of a car in the yard, so he jots down the info off the sign (should be at least a phone number, might have a flyer about the property incl asking price) & the address. When he gets home, he hops onto the county assessor's web site and finds out that it's assessed at 65,000 and that the current owners are "Sam & Susan Seller" who purchased the property in 1982 for 32,000. A quick check on zillow.com shows that comps should be in the range of 82,000.

Homework done, Joe calls me up and gives me the address & the info he found so far. I then contact the seller to find out the asking price (as it wasn't listed in this case) and get more information about the property. I also contact my realtor to get more information about the neighborhood & double-check the comps. If it looks good at that point, I go out to meet the seller & inspect the property making a detailed list of work that needs to be done and finding out what the seller planned to do about the car chasis in the yard, making my own punch list of repairs as I go and make a tentative offer based on the information I have so far to lock the property up while I finish my due diligence.

If everything works, a couple weeks later, give or take depending on the financing method, I'm closing escrow (getting the lease-option signed & notarized, whatever), paying Joe, & getting my subcontractors in to get the work done so my Realtor can get the property back onto the market ASAP.

So of your initial list,

Finding the property -- Uhm, can a bird dog do LESS and be useful?
Comps/FMV -- Quick on-line comps with a free service, nothing more
Estimating repairs & costs -- Eyeball the property to make sure the "handman special" isn't a burned out wreck
Researching, the neighborhood -- Didn't mention this, but no more than 'would you live there?' to exclude things like the worst parts of the Hill District
Property/Owner History -- Quick check on the county website, nothing more
Leins, Judgements, Taxes -- None of this was requested
Verify equity -- Not beyond making sure that the asking price, if known, isn't ABOVE the on-line comps/assessed value

As I said, still a lot of work between a drive-by & 5-10 minutes on-line and being in a position to make a decision to move forward on the deal.

Will every listing in the paper, from an on-line site, etc. make it past that info? Well, it should weed out sellers asking for FMV as well as get rid of the more obvious structural disasters. So they're worth more than a simple list of addresses.

Will every lead, even with this quickly background done first turn into a deal? No, some sellers will be unreasonable. Some properties will have less obvious structural defects. Or the neighborhood might not support a quick sale. So the ones that do go all the way through are worth more still. (And those that don't would be available to the bird dog to refer to someone else.)

[steve-homefree]

I would not require the bird dog to cover all the items you listed,I wouldn't trust the numbers and due deligence unless I do them myself anyway.

Address and the owners name and contact info,plus the basic mortgage info would be enough.

The fee that I have listed is for leads that contain the above info only.
More can be negotiated over time as we build a relationship.

I presently run my own business(going full time REI soon)and just don't have the time or energy to constantly look for deals. Paying a bird dog is like advertising that you pay for only if it works.

As for the bird dog tying up the property and assigning me the contract,that's okay too. If the numbers work for me,I don't care who I buy the property from.

[k6saunde]

Finding the property -- Uhm, can a bird dog do LESS and be useful?
Comps/FMV -- Quick on-line comps with a free service, nothing more
Estimating repairs & costs -- Eyeball the property to make sure the "handman special" isn't a burned out wreck
Researching, the neighborhood -- Didn't mention this, but no more than 'would you live there?' to exclude things like the worst parts of the Hill District
Property/Owner History -- Quick check on the county website, nothing more
Leins, Judgements, Taxes -- None of this was requested
Verify equity -- Not beyond making sure that the asking price, if known, isn't ABOVE the on-line comps/assessed value

As I said, still a lot of work between a drive-by & 5-10 minutes on-line and being in a position to make a decision to move forward on the deal.

Sorry, Misunderstood what you where looking for. I thought you wanted everything up to the negotiating of the deal. Including the walk through, estimated repair costs, materials etc., and actual comps.
Sorry, My Bad!

The info you want I can get in my sleep, LOL

Are FSBO's the only type of properties you look for? How about REO's or foreclosures?

[ThreeRiversREI]

The info you want I can get in my sleep, LOL

Are FSBO's the only type of properties you look for? How about REO's or foreclosures?

Yup, easy info, but enough to weed out the worst of the "every address listed in the Sunday paper" sort of thing to make sure the bird dog isn't wasting our time. Also, allowing us to do a certain amount of prioritizing (SFH before duplexes before larger, by decreasing equity withing property size, etc.) so that if we're getting too many leads, we can focus on the most likely deals first.

And I just used a FSBO as an example. Any situation where there's sufficient equity to make the deal practical, with pretty much exclusively cosmetic repairs for a quick flip, is what my partner wants to focus on this year. So pre-foreclosure, probate, divorce, bankruptcy, REO, out-of-state landlords, etc.

Also, by only paying for completed deals, it makes those leads 100 times more valuable than the random address sort of thing. (Say, $500 per deal instead of $5 per address up front.)

[steve-homefree]

Deals are the kind of properties I look for.
Fsbo's,foreclosures,whatever.
Rehabs in good neighborhoods.
Mostly single family,but I am interested in multifamily units(quads-up) as well.

I've even moved 3 houses,but not interested in doing that right now.
Made 50k on the last one,but waaayyy too time consuming.
I prefer they at least be on a foundation now.

[TommyOH]

Just to add my 2 cents, all I ask my bird-dogs for is an address and what the house looked like when they saw it. Since most bird-dogs are new to real estate, I wouldn't think of having them do the leg work. I'd have to do it again myself anyway.

I do not pay for leads, I pay for closed deals. Weather it is an outright purchase, lease option, or sub2, when the papers are signed, I'm writing a check for the bird-dog.

Keith, if you are doing everything up to the actual negotiation of the deal, why not just negotiate a price, get it under contract, and wholesale it? Instead of 1k for bird-dogging, you could charge 5k or more.

[k6saunde]

Just to add my 2 cents, all I ask my bird-dogs for is an address and what the house looked like when they saw it. Since most bird-dogs are new to real estate, I wouldn't think of having them do the leg work. I'd have to do it again myself anyway.

I do not pay for leads, I pay for closed deals. Weather it is an outright purchase, lease option, or sub2, when the papers are signed, I'm writing a check for the bird-dog.

Keith, if you are doing everything up to the actual negotiation of the deal, why not just negotiate a price, get it under contract, and wholesale it? Instead of 1k for bird-dogging, you could charge 5k or more.

The only reason I'm not doing that is I don't have the money to buy the property if I can't find a rehabber to assign it to. I need to build up some capital first.

I guess I could if I really wanted to, I have a list of over 100 rehabbers from around the area, with all the specs on what they look for in a property. And, I have some great exit clauses in my contracts.

I want to build a rep for supplying good leads, and not just properties that everyone can find. Plus, its good practice for me.