Marketing For Buyers For a Finders Fee

Yes it is legal for you to get paid a finders fee.

Myers Real Estate Solutions

But, is it legal for me to market a property that I don't have under contract so I can get paid the finders fee?

I have some buyers asking for property info right now. What kind of contract should I use with the seller to protect myself so that I can introduce the seller with the buyer?

I have the same question as Travis. For instance, I have a wholesale under contract and sent an eblast to everyone on my list. Another REI contacted me saying he's not interested in my property but he has a few under contract and would pay me a referral fee if I send him a buyer that actually buys. I trust this person even though we've never met. How does someone like me protect myself? I've heard two schools of thought. 1) the seller wouldnt screw me because I'd post his name everywhere and he'd lose credibility. 2) always, always get some type of birdog form in writing. What do you all think?

Thanks

Dave

Unless you have a property under contract I do not think it is legal for you to collect a finder's fee for finding a buyer. That would be doing the job of a RE agent and you need to be licensed for that.

The way we are able to legally collect a fee is that we are selling our "rights to the contract" and not the property itself. By finding a buyer to a property you DO NOT have under contract you are crossing that line and could get into trouble.

Karen

I market alot of Properties that are under Contract by someone else..I get paid by the seller..This is all Im doing right now to make money..All Im doing is sending my buyers to the sellers..I have a big enough Buyers List that I have no Problem finding the right buyer for there Property..I have even sent my Buyer to a seller that had a Bulk deal of $2 million..You just have to make sure you know the seller well or have a contract between you and them..I dont have a contract with none of my sellers but I have Trust with them

So, there's no way for me to protect myself between me and the investor? And, if it's illegal, then why do investors charge FINDER FEE's?

So, you actually use no paperwork when getting paid finder fee's?

(I am not a lawyer and nothing I suggest should be taken as legal advice.)

As I understand it, if you are looking for buyers for a property that you don't have under contract, you are acting as a bird dog. I would have a bird dog agreement with the contract holder to protect your interest. OR, you can make a co- wholesaling agreement with the contract holder whereby you are part of any transaction whether you bring a buyer or seller to the deal.

As per Karen's suggestion, different states have different RE laws. Make sure that you are not required to have a license to collect a fee for a real estate transaction. (As is required in FL where I am.) The way around this is to have yourself as part of the contract with you selling your rights to your part of the contract for a fee.
Have a RE lawyer explain how to do any of these suggestions legally in your state.

Hope this helps...

Andy Sager
DG's AndyS

Thanks Andy. Where can I find a bird dog agreement?

Use the Search box on the upper left side of the page and type in Bird Dog Agreement. This is one of the responses by a Success Academy coach. Once again, take this to an attorney to confirm that it is applicable in your state. http://www.deangraziosi.com/real-estate-forums/contracts-and-offers/3634...

Andy Sager
DG's AndyS

Yes, I'll make sure I do that. I'm going to print this out and show it to my attorney and see what he say about it.

But, hey, I thought bird dogging is for finding property? Instead of finding buyers....

PO-TATE-O, PO-TAT-O

You are looking for someone to be part of a deal for someone else. To me, that's bird dogging.
Just make sure that your lawyer approves of your paperwork

Andy Sager
DG's AndyS

But, I think I rather assign it than be a bird dog.

Travis:
But then you've changed the context of your original post. You asked if it was legal to market a property for a finders fee? If you are marketing a property that's not yours (or you have no rights to), you should have some form of documentation/ agreement with the owner of the property/contract so you don't get bypassed out of the deal. If you are going to assign the contract (or to be exact: your rights to the contract) then why would you be marketing someone else's property that they have under contract? You should be marketing for your own property to put under contract and assign. Otherwise, you are looking for a finder's fee or "Bird dogging" for a buyer.

I would suggest you not get caught up in the terminology. I was recently involved in a situation where I was going to put a house under contract but because of the price, my assignment fee was going to be small if I wanted the deal. It turned out that a buyer I had was offering a bird dog fee which would have been the same amount I was going to charge as an assignment fee. So I am going to get the same amount of money whether I assign or bird dog. I wouldn't have to do any negotiations or legal work and I would get the same amount. Like I said PO-TATE-O, PO-TAT-O. (FYI, I'll know in about a week whether the deal will go through.)

Just make sure you A) Cover your butt & B) Make sure you are doing "A" legally

Hope this helps...

Andy Sager
DG's AndyS

I'm going to start talking with my attorney everyday. Soon as I wake up and just ask him about real estate. Thanks Andy!

My understanding is that it is legal to get some type of finder's fee for getting a buyer for the investor who has the property under contract. Have you ever heard of co-wholesaling? It's when you work together with another investor...either them helping you out, or the other way around. Pretty much, everyone comes out a winner. It also sounds somewhat like bird dogging.

I haven't read anything on co-wholesaling. Where's the info for that?

I am looking for a contract that would be done with a seller that would allow me to purchase their property at any given time, within certain dates.(the ending date could be extended.) This contract doesn't deny the seller the opportunity of selling to someone else at any given time or listing it with a realtor, if that is their desire. It gives me a contract to advertise the property for sale and assign it or the contract to the buyer. I was just wondering if anyone has seen any such contract or if I need to write one up and have it checked with an attorney? A contract is a contract and all contracts can be sold.

Vincent

http://ezinearticles.com/?Co-Wholesaling:-A-Faster-Way-to-Sell-Your-Prop...

If you googled co-wholesaling, a lot of stuff will come up. Hope this helps a little.

A birddog is someone who finds deals for investors for a fee. NOT finding buyers for a seller.

Sorry, Andy, but I have to disagree regarding not getting caught up in terminology. If you don't get caught up in it to the extent that you know what that term REALLY means, you are setting yourself up for some major problems.

Mr. Maxwell, this would not fall under co-wholesaling either. In co-wholesaling, another investor already has the property under contract and is looking for a buyer. If you have a buyer, you can connect buyer with the person (investor) who has the contract that they are wanting to sell or assign. Again, they are selling their contract or rights in the contract, NOT the property.

Investors charge "finder's fees" for finding properties for buyers.

Thanks Karen. I just really wanted to know how can I protect my self legally while doing this. I guess I rather wholesale than bird dog just so I can have control of things.

in several ways. There are a variety of ways to do this. This is called co-wholesaling and we do it all the time in real estate. The network of investors is vast and large. It is because we all have different buyers and different properties under contract that we network together to create the maximum exposure to a property. We do it in several ways.

Many (and most if you don't want to be cut out of the deal) of us will sign an NDA or NCND agreement which protects you in the case of a deal going through so you or the others don't get circumvented; regardless of which of the below is used.

One way is to use findere's fees agreements, which are perfectly legal; especially when selling another property that is under contract. Like Karen was saying, you are selling the CONTRACT not the real estate...

Number two is to have an assignment agreement. There are multiple ways to do that as well. Sometimes, we have a master fee agreement that spells out what goes to whom, so the end buyer is just paying one fee. Sometimes we have it spelled out that $x goes to Zion, $x goes to XYZ Corp.

Another way to do it is to have an agreement with either the seller of the contract (or the property when no agent is involved and you have the property under contract) that they pay you $X or x% if they find a buyer; or if you have an agreement directly with the buyer to pay you $x or x% if they close on the deal.

These are the most common ways, but they work across the board. I even have one of my buyers, who is also a real estate broker, who pays me 'marketing fees', and it is legal because of the 'wording'. I questioned this because I took the broker's course some time ago, and thought it was a big no no; but he explained that he is allowed to have an independent person help him with things and pay that way; so long as they aren't called 'finder's fees'.

Think outside the box.

Karen:
Regarding my comment to Travis, in reading his posts, he started out asking if it was legal to market for buyers for a finder's fee. By the end of our messages he stated that he didn't want to "Bird dog" but wanted to assign. My suggestions were all along the lines of protecting his Ass..ets.

I can tell you that in certain states, mine being one of them, you need to be licensed in order to be paid from the sale of real estate if it is not from your own property. It's really a hassle to legally collect a finder's fee here. That being said, if Travis were here and has an agreement whereby he is a principle on the contract and paid at the resolution of the contract, that circumvents the licensing issue. Once again, I would have that confirmed and written up by a local RE attorney. My comment about the terminology was directed at not labeling how he came to the result (as I explained in my example.)

"Bird dogging" while commonly used to find deals for investors, I believe is defined as bringing leads to another party for a fee. Where does it say that it has to be a seller and not a buyer? Wouldn't co-wholesaling be a form of bird dogging? One person has the property, the other the buyer. Each person is looking for the other. It's taught that you make an agreement with the potential co-wholesaler to protect your interest in the deal prior to the deal. What's the difference between that and a bird dog agreement? " I am supplying you with a participant in a deal and will be paid $x for doing that." Was this from a co-wholesaling or bird dog agreement? You see my point?
Yes, terminology is extremely important. You should know what you are saying and doing to make sure you are protected. In this case however, I believe it was irrelevant.

Hope this better explains my post...

Andy Sager
DG's AndyS

I appreciate all of your reply's. I'm just asking plenty of questions so I can go ahead and picture it in my mind how I'm going to do it before I do it so, that it can go smoothly. But, I think I rather LOCK IT UP as if I was buying so that I can assign it for more CONTROL of the property.

Where can I get a copy of the NDA and the NCND agreement?

Remember to use the seach box AND bookmark things you want/need

http://www.deangraziosi.com/real-estate-forums/contracts/23094/non-circu...

Yes sir. Thanks Mike.