Bird Dog Fees - Why so low???
Hey- I am new to this site, but had a question regarding the fees I am seeing bird-doggers charge. Why so low, guys and gals? Are you just not doing that much work? Do you not provide a great value to your investor(s)? Why am I seeing $500 and/or 1% fees? My investors stand to make 30K to well over 100K per deal I find them. And I get paid very well for it. I am doing all the work- it's just their money.
What is the reasoning behind such a low fee? Are there any other bird-doggers out there that charge more than that?
-LJ
LittleJake,
Glad to meet you.
As in any profession as you gain knowledge your fee's move upward. The Bird Dogs on this site will find that the more in demand they become the more they can and will charge the investor.
The amount charged the investor when first starting out will rapidly rise as the Bird Dog becomes proficient at his trade.
There is Big Bucks in Bird Dogging, glad to see you are one who is making the Big Bucks.
Welcome on board this board, always good to see a new Bird Dogger.
John $Cash$ Locke
LittleJake:
Ultimately the amount is determined by negotiation, so if you offer something low and the investor would have paid more, you will never know how much he/she would have really paid you.
But, keep in mind that birddogging fees rately go as high as if you were a partner in the deal. The birddog has little or no risk in the deal. It is difficult for the investor to determine up front who much profit they will get. This goes beyond the pure economics, but also takes into account latent defects (e.g., environmental contamination, cracked slabs that were discovered under the carpet which the investor must know disclose to all subsequent buyers, thereby reducing the value of the house).
In addition, it is not as if the investor's money is not important. It is if you need the investor's money! Otherwise you would have done the deal for yourself and kept all of the profit for yourself.
Sure, you are doing nearly all of the work. But there is also work and additional cost the investor has (meeting with his/her attorney on the deal, contacting his/her rehabbers, carrying the vacant property, arranging for renters, etc.).
One final comment, the amount of the fee I have seen usually depends on the purchase price, the potential profit in the deal, the expected holding period, whether the birddog will be involved in the negotiation or has gotten a signed and legally enforceable contract. (I have found many birddog contracts wholly inadequate to protect an investor, so the investor must take on more of the risk should a problem develop before or after closing).
Anyway, that is my 2 cents worth,
Taxjunkie
taxjunkie,
I am not sure where you are located what the role of a Bird Dog is.
I teach the Bird Dog to find the deal for the investor not negotiate the deal with the seller.
So if a Bird Dog signs any contract with the seller this is not Bird Dogging this now falls in the realm of 'flipping or wholesale' investing.
You must understand that most new people just starting out may not have the funds or want to take on the liabilty of an investor. This is an excellent way for a new person to start their investing career, learning the various investing methods and get paid for doing it.
Some of the pro investors today started out as Bird Dogs and did very well until they were comfortable enough to branch out in various methods of investing.
John $Cash$ Locke
John:
I agree with you that a real birddog is one that has found the deal and not done any negotiating, but most inexperienced investors use the terms loosely. That is why I included both scenarios in my post. I have had a number of people bring me a signed contract wanting to know if I would "buy it off of them." While technically they are an investor (assignee) flipping a deal, many of them told me that they "I just birddog for investors."
I have not read your course, so I apologize if my post is not consistent with the terminology you use in your book. Thanks for the clarification,
Kind Regards,
Taxjunkie
It's like they say, live, grow, and learn.
When I started bird-dogging my prices were 1%, now they are 2% of the purchase price.
On a $100K lead, that is $2,000. I don't know where you are from, but that is not bad for a couple minutes on the phone getting some information. (I don't negotiate any deals for investors.)
I have plans on moving to a different payscale that will be more lucrative than this, but in due time.
In the meanwhile, I view bird-dogging as an opportunity to get free mentoring. Many of my investors say they will pay a higher price, but money is not always important. I have close relationships with my investors and are always asking questions. (Free Mentoring, well almost....I am not charging as high as I can) I got some legal advice from commercial real estate attorney, who is a client.
Besides, I am getting paid to learn how to master the most important part of CREI, locating motivated sellers.
Once I am profient at generating quality leads and understand the details of CREI, I know investors will pay out the ying-yang.
<IMG SRC="images/forum/smilies/icon_lol.gif">
"establish systems before complexity sets in"
_________________
Freddie 'Fetch' Taylor * MyBird-Dog.com * "You Ask, We Fetch!"
[ Edited by furiousinc on Date 03/25/2003 ]
You must really be in an area where there is little supply. Asking for a percentage of the purchase price is way out of bounds in my opinion.
If you get it, good for you but to me that is way too much for what little risk you are taking.
The investor is the one on the hook here everyone, and although it is great getting leads, that is only the start of the process. Any good investor is also doing their own marketing, and a birdog is only a component of their overall plan.
The deal better be juicy if you are asking for percentage points..
I would stress caution in throwing big numbers around on this site, there are many who might think this is common and easy. I for one would not pay a bird dog any percentage of a purchase price, or any back end unless that bird dog was doing MUCH more than prospecting, sorting etc.
BWDIK
Hi Littlejake et al.
I birddog in Australia on the Gold Coast. I charge 2%, min fee is $5000, $1000 up front non refundable to start looking. I am flat out finding good deals because there is always more money chasing real estate then real estate chasing money.
Part of my service is client education so they completely understand the due diligence presented to them. I teach them to pull any deal presented to them completely to pieces and look for any traps I may have missed.
If you do a genuine job, make heaps of $ for your clients and don't come across as a real estate salesman dying for a commission, you will do ok.
Attitude is all. If you come across as non confident, hesitant when answering questions put to you by clients and answering ANY question with "I assume..." you will fail. My experience is that I must know all the answeres before presenting a deal. period.
My market place starts at $250k up to $2 million, and prices are rising at a million miles an hour because of huge demand.
But I still get deals that stack up, all through real estate agents.
I don't have time yet to start a campaign to flush out sellers direct.
Your best tool in this business is the phone. And guard your time.
You need to know values in your target area well, so you can make an instant decision. Once I have a handle on an area, I put it on care and maintenance, ie call all my realtors once a week or so.
This ensures a constant flow of leads and I do a deal a week so far.
I keep big maps on the wall with target prices pinned on, so I can see what is selling where for what $ at a glance.
Visually I can get a handle on rapidly rising prices at a street level, and know what is a good deal or not when it's presented.
Most of my investors are not buy and hold. Their strategy is to upgrade the use of the land, usually by developing duplex or townhomes on their properties as fast as possible.
Therefore contracts are presented with as little money down as possible to seal the deal, settlement (closing) extended as far into the future as possible, and always subject to the developmnent approval being approved by the local council (county).
Hope this helps.
Rick
Hey Everyone- thanks for your replies! OK- I don't think I am just a bird-dog by what everyone is saying. I would look at myself as more of a partner, because I am doing work to get the place sold even after the purchase is made. Plus, I am spending tons of time and car miles during the week which may result in just one purchase. I am also in a position to lose money on the deal if it goes crappy.
For those of you who just spend some time on the phone for a few minutes and get the $500 to 1% or 2% of whatever, I understand how that is justified. Curious, though, how you know who to call without spending any time. I mean, the impression given here is that a few minutes on the phone gets you $500. There's gotta be some research time in there as well. What is it, exactly, that you are doing?
-LJ