Earn a referral fee by connecting a home buyer and a seller together. A referral fee can be paid as a flat fee or a percentage of a deal. Referral fees are also known as finder’s fees. Become a scout, jobber, or bird dog—other names for a person who finds deals for real estate investors. Seek out bargain properties in your area. Investors make money when they buy low and sell high. Hunt for potential deals everywhere you go, gather information, and forward the details to real estate investors.
Earning the Referral Fee
Perform a browser search for investors who pay referral fees. Type the terms “real estate bird dog,” “property scout” and “real estate finder’s fee” into the search box. Look for results that show names and contact information for real estate investors.
Contact several real estate investors and ask whether they give referral fees to bird dogs. Find out the specific areas or states in which the investor buys, the maximum sales price the investor wants to pay and whether the investor is seeking rehabs or properties that just require light cosmetic work. Take notes to remember what the investor seeks.
Discuss your referral fee before sending a lead to the real estate investor. In keeping with real estate law, get a written agreement from the investor. This agreement will clearly detail the terms and leave little room for unanswered questions.
Drive through nearby neighborhoods and seek houses displaying “For Sale by Owner” signs. Jot down addresses and phone numbers. Call “For Sale by Owner” ads from your local newspaper. Browse sites such as forsalebyowner.com, and find properties that meet each real estate investor’s specifications. Visit your local courthouse and look at the docket for property addresses listed under “unlawful detainer.” (Properties under unlawful detainer have a pending legal action regarding possession.) In these cases, a lender, landlord or seller has a real estate issue needing resolution. If a real estate investor can solve this issue, all parties involved can benefit.
Pass the seller and property information to real estate investors interested in buying properties. Remember that bird dogs work for investors. The investors will give feedback regarding the leads. Listen to what each investor says, and plan on making adjustments.
After one week, follow up with the investor if unsure about the status of the lead. The real estate investor should be willing to give status information on the lead.
Repeat the process with multiple investors. It may take several attempts and many leads sent before a successful transaction occurs.
Real estate investors may either pay by-the-lead or when a deal closes. A lead materializes when you encounter a homeowner who needs to sell his house quickly. A closed deal occurs when the homeowner actually sells his property to the investor. In another instance, the investor pays the referral fee prior to closing.
Real estate investors pay referral fees either before or after closing. Distressed properties (commonly called rehabs) usually sell at retail. The end user typically buys the property after a full renovation. It may take several months to complete repairs and make the property marketable. Insist that real estate investors pay referral fees upfront when dealing with rehabs.
A productive deal can prove far more valuable to real estate investors than just a lead. According to “The New Path to Real Estate Wealth, Earning Without Owning,” by Chantal Howell and Bill Carey, astute investors willingly disburse referral fees to people who bring them profitable deals. Real estate investors pay for profitable results because the investor makes money.
As stated by Carleton Sheets, "Learn to think like an investor." Add value to the marketplace by educating yourself on real estate investing. Provide an indispensable service to real estate investors. Applied knowledge increases a finder’s potential to make more money.
In “The ABC’s of Real Estate Investing, The Secrets of Finding Hidden Profits Most Investors Miss,” Ken McElroy suggests joining a real estate networking group or trade association to meet people who willingly exchange buyer and seller referrals. Introduce yourself, and ask people what they do. Find out how to help them. Then get started.
Some investors may be willing to pay for each lead, regardless of the outcome. But most investors will only pay for results. This means many investors will only pay a referral fee only after a deal has resulted in a closed transaction.
- "ABC’s of Real Estate Investing, The Secrets of Finding Hidden Profits Most Investors Miss”; Ken McElroy; 2004
- “No Down Payment Real Estate Program"; Carleton H. Sheets; 2005
- “The New Path to Real Estate Wealth”; Earning Without Owning"; Chantal Howell and Bill Carey; 2004
- The Second Judicial Court, Minnesota Judicial Branch
- fist full of cash image by Pix by Marti from Fotolia.com