As you journey into the world of real estate, you’re likely to come across bird dogs. Of course, there’s a wide variety of different practices attached to some creative names to describe them, but bird dog may be the most peculiar of them all.
What might come as a surprise is the fact that it’s one of the most hands-off practices in the real estate industry. In other words, being a bird dog in real estate is one of the simplest ways for real estate investors to make money by doing very little work.
What is bird dog real estate?
A bird dog in real estate terms is someone that identifies distressed properties, recommends them to other real estate investors, and collects a finder’s fee when that investor closes the deal. That’s all there is to it.
The process of finding distressed properties can vary. It can be as simple as stumbling across a home that is ready for a new owner, or it can take research via networking and so forth. Either way, the bird dog doesn’t get involved with the procurement and sale of the home. They simply recommend it to another agent who will handle that end of things.
Professionals sometimes describe the process as a step down from wholesaling real estate. In many ways, the process is similar. Only a bird dog never invests money into the property or facilitates the transaction in any way.
How to bird dog real estate:
Because a bird dog doesn’t invest much work or money into the transaction, you can’t expect to make millions by acting like one. Still, it can serve as a great way to learn the ins and outs of real estate and make some money along the way. Below you’ll find a simple step-by-step guide on how to get started.
- Build a network of investors – It can be tough to start building your own network. Some suggest beginning by calling advertisements for investors looking to buy houses. This can be a great foot in the door and a great way to build experience. However, you can stand to make more money by linking up with independent investors.
- Draw up a contract/negotiate payments – It’s a good idea to touch base with an licensed real estate attorney or source a draft contract from a reputable source. This helps ensure that you get paid on time and that you are paid accordingly. Most investors will accept a one-time payment at closing, while others suggest charging per lead as it can add up over time. Of course, the more, the better, but you will need to negotiate the deal with each investor to find something that works best for both parties.
- Start hunting – After you have a client base, it’s time to start hunting. Finding property leads can be a trick in and of itself, and there are many ways to go about it. It’s OK to begin by talking with other real estate professionals, but you have to remember that they won’t give you any solid leads that they stand to make money on. Explore neighborhoods, socialize with locals, make phone calls, and knock on doors until you find leads to pass along.
Is bird-dogging worth it?
Bird dogging is worth it if it is legal and you are looking to build your network while earning some extra money. So, before you decide to be a real estate bird dog, you should check with your local and state laws to ensure you won’t get into any legal trouble.
If it is legal, you and any leads you reach out to need to understand that you are not a real estate agent and cannot facilitate the transaction in any other way. If you do this without a real estate license, you can face legal repercussions.
You should also know that some professionals view bird-dogging as unethical and frown upon the practice. In other words, you can damage your reputation to the extent that it may create hardships down the road as you further your ventures as a real estate professional.
The final risk to be aware of is that you can get ripped off. Without a contract, a dishonest agent can neglect to pay your fee, and there may be little recourse available to you. This is why preparing a proper contract is a vital step.
That isn’t to say bird-dogging is all bad or that there aren’t any positives. As we said, it’s an excellent way to start learning the ins and outs of real estate. It also allows you to establish a network that will allow you to hit the ground running when you are ready to take a step up as a real estate professional.
Of course, making money is another benefit. Even if it’s only a few hundred dollars per transaction, the earnings can quickly add up. That makes it an excellent side hustle, but as you build experience, you’re sure to move on to more rewarding ventures.
How do you become a bird dog in real estate?
You can become a bird dog in real estate by building a proper network, drafting a contract, and learning how to find property leads. There are no licensing requirements, nor are there age restrictions. It’s so easy that a teenager of legal working age can consider undertaking it until they are ready to become a licensed real estate professional.
How much do bird dogs make?
Being a bird dog likely won’t make you rich, but the payments can be shockingly high. On average, bird dog fees range from $500-$1,000 upon closing. Keep in mind that it can take weeks or months for the agent to find a buyer and close the deal so that you won’t get paid immediately. There is also no guarantee that the agent will be able to find a buyer for the property.
Are bird dog fees illegal?
In most places, bird dog fees or finder’s fees are perfectly legal. However, it is an illegal practice in some areas. To ensure you can act as a bird dog in your area, you will need to reference your local and state laws.