What Is Bird Dogging In Real Estate and How To Do It Like A Pro

market opportunity analysis

There’s a lot of money to be made in the real estate business. However, some people might be scared away due to the amount of money that is required to start real estate investing.

Although there are lots of financing options available (from conventional loans to hard money loans, and more), it’s important to note that there are alternative ways that you can make money in real estate. For example, bird dogging.

What Is A Bird Dog In Real Estate?

The term “bird dog” comes from the hunting world. In order to flush out game, hunters would train dogs to find birds and then show them to the hunters. This would help the hunters know where the birds were so they could get ready to shoot.

Similarly, a bird dog in real estate is someone who helps find properties that are good investment opportunities and then shows them to investors. This process is called bird dogging.

How Bird Dogging Works In A Nutshell

In the real estate world, bird dogs scour the market for foreclosures, short sales, distressed properties, or other investment opportunities. Once the bird dog finds a property, they contact a reliable investor. The investor will then decide if they want to pursue the deal or not. The bird dog makes money by getting paid a finder’s fee by the investor.

For example, let’s say you’re a bird dog and you find a short sale property (a short sale is when you make an offer to a seller who is facing disclosure for less than the amount owed on the mortgage). You contact an investor and tell them about the property.

Generally speaking, an investor will either pay a flat fee to you as the bird dog, or alternatively a percentage of any profits the investor generated from the deal (anywhere from 2 to 8%).

Is Bird Dogging Legal?

Bird dogging is a perfectly legal way to make money in the real estate business. However, you need to make sure that you’re not misrepresenting yourself as the owner of a property. You also cannot take any part in the transaction between the buyer and the seller, meaning you cannot act as an agent or broker at any point.

You also need to make sure that you are not trespassing on private property. As long as you are following the law, you should be fine. However, you should still check local laws and regulations to make sure that you are bird dogging legally.

The Advantages Of Bird Dogging

There are numerous advantages to bird dogging. The following are just a few of the reasons bird dogging may be the right real estate investment strategy for you:

  • Low cost of entry: One of the biggest advantages of bird dogging is that it doesn’t require an investment on your part, which means it’s one of the few ways you can invest in real estate without the funds.
  • No credit needed: Another advantage of bird dogging is that you don’t need good credit in order to get started. Most other forms of real estate investing require you to secure financing, which means you’ll need good credit. If you have poor credit, bird dogging is a great alternative.
  • Less risky: Bird dogging is also considered a less risky type of real estate investment. This is because you’re not putting any money down on a property, so you’re not at risk of losing any money if the deal falls through or the investment doesn’t pan out as expected.
  • Learn about real estate: Bird dogging can also help you learn about the real estate market and what type of deals are most profitable. This is valuable information that you can use to make money on real estate in the future.
  • Build your own real estate business: Not only can you gain valuable real estate market experience and knowledge by bird dogging, but you can also build a network of contacts for the future. As such, bird dogging is an excellent way to build your own real estate business from the ground up.

The Drawbacks Of Real Estate Bird Dogging

Despite the many advantages of bird dogging if you are just starting out in real estate, there are a few potential disadvantages you should know about. These include:

  • It’s not an easy job: One of the biggest disadvantages of bird dogging is that it can be really difficult. You have to put in a lot of time and effort to find good deals and, even then, there is no guarantee that you’ll be successful.

    Finding good deals can be a challenge, and so can finding investors to take advantage of those deals that you do find.

  • Commission-only work carries its risks: Bird dogging is a commission-only job, which means you only make money if the deal goes through. This can be a risky position to be in, as there’s no guarantee that the deal will close.

    If the deal falls through, you don’t get paid, which means you could end up spending a lot of time working for nothing.

  • You could get scammed: Unfortunately, there are always people out there looking to take advantage of others. When you’re bird dogging, you need to be careful of scammers who may try to take advantage of you.

    Make sure to do research and always work with reputable people. The last thing you want to do is to find an investment opportunity for someone and not get paid for doing so.

How To Bird Dog Without Losing Your Commission

Because of how much work it takes to not only find a good investment opportunity but to find an investor to present the deal to, it’s crucial to make sure you protect your commission. There are a few steps you can take to ensure you get paid for your work, which include the following:

1. Invest In Research

One of the best things you can do to protect your commission is to invest in research. The more you know about a particular area or type of real estate, the easier it will be to find good deals.

2. Focus On Specialization

Consider specializing in a particular type of investment, such as fix-and-flips, buy and hold, or short sales. This will make it easier to find investors who are looking for those types of deals and to build relationships with those investors.

Furthermore, specializing in a certain type of real estate investing may allow you to command a higher commission.

3. Build A Solid Network

Another important thing you can do to protect your commission is to build a solid network of contacts. This includes both investors and real estate professionals, such as brokers, agents, and appraisers.

The more people you know in the industry, the easier it will be to find good deals and investors. It’s also important to build relationships with those people so that they trust you and are more likely to do business with you in the future.

4. Locate Motivated Sellers

One of the best ways to find a good deal is to locate motivated sellers. These are sellers who are motivated to sell for one reason or another and are often willing to sell for less than the market value. You can find motivated sellers by searching online, contacting real estate agents, and networking with other professionals in the industry.

5. Inspect And Verify Your Seller

Once you’ve located a motivated seller, it’s important to inspect and verify the seller before you present it to an investor. You’ll want to make sure that the seller is the sole owner of the property. This is to ensure that you are not being scammed or taken advantage of, and that there are no legal complications that come up in the future.

You should also do your due diligence to make sure the property is in good condition and is a good investment, such as by getting an appraisal to verify the value of the property. Doing so will help you protect your commission by making sure that the investor is getting a good deal.

6. Find Buyers

Once you’ve found a good deal, it’s important to find buyers who are motivated to buy. These are usually investors who are looking for a particular type of property, such as fix-and-flips or buy and holds.

You can find motivated buyers by networking with other professionals in the industry, searching online, or contacting real estate agents. Finding buyers is generally much easier if you’ve built a network of contacts and you’ve specialized in a specific type of real estate investment.

7. Ensure You Have Legal Protection

Another important way to protect your commission is to ensure you have legal protection. This includes making sure that you have a written agreement with the seller that outlines your scope of work, your commission, and what will happen if the deal falls through.

You should also consider setting up a limited liability company (LLC) or other legal entity to protect your personal assets in case something goes wrong. Making sure you’re protected legally will help ensure that you get paid for your work and avoid any complications in the future.

How To Find Bird Dog Real Estate Deals

If you’re looking for bird dog real estate deals, there are a few things you can do to find them. The following are a few popular ways to identify real estate deals when bird dogging:

  • Driving For Dollars

One of the most popular ways to find real estate deals is by driving for dollars. This involves driving around various neighborhoods looking for properties that are in disrepair, and then contacting the owners to see if they would be interested in selling. This method can be very effective, but it does require a lot of time and effort.

  • For Sale By Owner

Another way to find real estate deals is by looking for For Sale By Owner (FSBO) signs. These are signs that homeowners put up when they’re selling their property without the help of a real estate agent. You can find these signs by driving around neighborhoods or searching online.

FSBO homes tend to be good investments because the sellers aren’t working with an agent, which means they don’t have to pay a commission on the sale. As a result, they may be more willing to negotiate on the price.

  • Multiple Listing Services

Another way to find real estate deals is by searching Multiple Listing Services (MLS). MLS is a database that real estate agents use to list properties for sale. You can search MLS listings online or through a real estate agent. This method is effective because it gives you access to a wide variety of properties that are currently on the market.

Wholesaling Versus Bird Dogging

At first glance, bird dogging may seem the same as wholesaling. Both involve finding good deals on properties and then passing them onto investors. The main difference is that when wholesaling, you enter into a contract with the seller of the property.

The contract details how long you have to find a buyer and the minimum amount the property must be sold for. You will then find a buyer on the seller’s behalf and make a commission for doing so. However, you will generally have to put down a deposit for this contract.

When you bird dog, no such contract exists. As such, the property may sell before you are able to find an investor.

Essentially, when it comes to wholesaling versus bird dogging, wholesaling costs more money than bird dogging. However, wholesaling comes with the security of knowing that you have a certain amount of time to find an investor to buy the property before the seller finds someone else to sell to.

Should You Begin Bird Dogging As Part of Your Real Estate Investment Journey?

Bird dogging isn’t for everyone. After all, it requires a lot of time and effort. However, it can be a great way to get started in real estate investing. It’s a low-cost way to learn about the market and find good deals on properties. It can also be a great way to build relationships with other investors.

If you’re thinking about starting out in real estate investing and you don’t want to make a massive financial commitment, bird dogging may be a good option for you.

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