Bird-dog Contract
Newbie looking to start off as a bird dog. The Investor wants me to sign an 'independent contractor' agreement saying he will pay me a finder's fee at each successfull closing.
I guess my questions are... is this playing by the rules? What is the best way to word this type of contract?
I'm in Texas, specifically would it violate any TREC rules requiring licensing?
Any help would be appreciated.
Ernest
If your going to birddog then you should have each investor you work with sign a contract before you start working with them.
There is a sample contract in the ebook offered by John Locke which you can purchase from this site by going up to the "shop" tab at the top of this site.
You may want to run it by your attorney before using it.
this is a pretty standard approach. You are essentially an independent broker, finding buyers for another. Contractor will suffice, too. How can you be paid unless you provide
viable buyers who actually buy something? You should be good at qualifying buyers and knowing how your investor wants his deals done in detail. The latter is easy. Do you know how to do the former?
peace,
dave
peoria & leaseown4u
Thanks for the replies...looking into the e-book.
The reason I was asking this, is because some say a license is required to receive a referral or 'finder's fee'.
I don't have an attorney to run the contract by (didn't think I would need one so soon).
Just looking for a little advice.... Of course all the materials I've read, avoid the topic like the plague and the TREC web site really doesn't have much on it.
Thanks again....
E.
I believe you are in Texas and I don't know the laws in your state.
Maybe a birddog from your state will comment here and let you know what is required.
If not you may want to check with an attorney.
I THOUGHT BIRD-DOGGING WAS ILLEGAL?
Bert,
Glad to meet you.
If you understand the system, then your thinking is wrong.
The local Real Estate Boards impose regulation relevant to the distribution or aid in distribution of a homestead with the intent to protect the consumer (and in some rare cases monopolize the marketplace).
Whether or not this legislation is put into place in a criminal or a civil context, it does appear fairly evident that the enforcement of this legislation would be limited to that of:
a) When a consumer is being blind-sided (ie: you are acting on his or her behalf without proper licensing and steering him/her wrong)
b) You are continuously taking a "fee" for selling real estate.
If you are working with an investor, and you are paid by the investor, who has experience in real estate transactions, and you are not party to that transaction (ie: a consultant) you should, (this is not to be construed as legal advice) be ok, for the following reasons:
1) You are taking a fee for selling information, not real estate (nobody can prevent you from charging $5.00 to tell him or her were the nearest gas station is, or where the nearest "deal" is)
2) Even if legislation was in place to protect the consumer, you have conducted no harm to the consumer....so in a semi-perfect world, you can indeed pay for a lead on a house!
I think it is important to know, most investors are opposed to the local Real Estate Boards attempting to corner the market on Buying/Selling properties, I am certainly of the opinion that the local Boards would like to see no investors/creative RE at all so that they can continue to take a small chunk out of every property sold and have the properties sold according to their "rules & regulations".
There is also such a thing as a simple Partnership Agreement, thereby making you and the investor principals in the transaction. The Bird Dog is bought out of the Partnership by the investor, thereby violating no State Statute.
John $Cash$ Locke
Please Bert, I do hope that was meant to be a joke.
Signing an independent contractor's agreement would be a pretty standard practice. As an independent contractor, you are entitled receive payment for your services, in this case, finding properties that meet the criteria of the investor.
You should check with a local attorney if you have questions about the legality of accepting payments in you state, but as an independent contractor, you aren't getting a 'finder's/referal fee.' You are getting paid for services rendered.
As a birddog, it's not your job to qualify the sellers or to research the house more than is necessary to find out if they meet the criteria of your investor. You definitely don't do any offers and you don't represent either party in the transaction. After setting up an appointment for the investor, you job is done. Sit back and wait on the closing if it happens.
Roger
Hi,
I too am from Texas and have been reading the local RE investors bulletin boards and it is getting really scary.
John Locke's post on this topic seems to be the best news yet.
If you are interested in an investor who is looking for bird-dogs, has an agreement in place while his attorney is creating another that will work to your advantage and take away the fear being created by the boards..send me an email.
I am wondering if maybe you can put a contract on it..then assing the contract to the investor.. that way you make more money than a bird dog would.
Say for example you find a property that has an ARV of 100k. selling for 40k. Needs 20k in repairs. You put a contract on it for 40k.. sell it to your investor for 45k he puts in the 20k to fix.. and makes about 30k in profit... but you have to have "and/or assigns next to your name as the buyer.
From what I have heard anyway..
I too am just learning.
jorge