2010 How to Make a Fortune as a Bird-Dog Monica Main

Transcription

2010
How to Make a Fortune as a Bird-Dog
Monica Main
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Copyright Notice
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further information should be addressed to: global-success@att.net.
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However, neither the author nor the publisher assumes any responsibility for errors or omissions, or
for possible contrary interpretations of this material.
This publication is not intended to be a source of legal or accounting advice. The information
contained in this publication may be subject to varying state or local laws or regulations. The material
in this publication is provided for informational purposes only. It is recommended to obtain
professional legal and accounting advice from licensed professionals regarding state and local laws
and regulations and how they may apply to any particular business.
The purchaser or reader of this publication assumes responsibility for the use of these materials and
information. Adherence to all applicable laws and regulations, including federal and state and local,
governing professional licensing, business practices, advertising, and all other aspects of doing
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responsible for verifying the information contained in this material and using it responsibly. Any
perceived slights of specific people or organizations are unintentional.
Copyright © 2010 by Monica Main. All rights reserved.
www.BirdDoggingOpportunity.com
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TABLE OF CONTENTS
Preface ..................................................................................................... 4
Chapter 1: Introduction............................................................................ 6
Chapter 2: Fundamentals ....................................................................... 16
Chapter 3: Dealing with Buyers .............................................................. 20
Chapter 4: Finding Properties & Dealing with Sellers.............................. 32
Chapter 5: Dealing with Title Companies ................................................ 57
Chapter 6: Count Down to Closing.......................................................... 60
Chapter 7: Avoiding Legal Pitfalls ........................................................... 64
Chapter 8: Virtualizing Your Business ..................................................... 71
Chapter 9: Bird-Dogging As a Gateway ................................................... 76
Chapter 10: Conclusion .......................................................................... 80
Bird-Dog's Action Plan ............................................................................ 81
Extras...................................................................................................... 82
Q&A .............................................................................................. 82
Common Mistakes ......................................................................... 86
Glossary ........................................................................................ 88
Peak Performance Library ............................................................. 92
Sample Contracts .......................................................................... 93
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Preface
Many people dream of creating wealth through real estate but believe that they are locked out of
the game by circumstances or lack of opportunity. One of the aims of this book is to prove that
creating wealth through real estate is an achievement that is within the reach of anybody by
detailing the specific steps and strategies that are necessary to begin a real estate career.
There is never a lack of opportunity in real estate; there are only different types of
opportunities available. There is also no barrier to entry into the market that cannot be
overcome with education, creativity, and patience. This manual will show you how to get
yourself into the game no matter where you are starting from in life.
There are almost as many different ways of investing in and profiting from real estate as there
are different real estate investors. There is, however, only one best way to get started as a real
estate entrepreneur for most people with no experience and no capital or credit, which is birddogging.
Being a bird-dog essentially means that you find deals for other investors who are ready to buy,
and find a way to profit from making the transaction happen. This is a field with lots of room for
creative problem solving that allows you to proceed with minimal risk, learning the ropes of the
business as you go along, and earn while you learn.
This book can't possibly provide a comprehensive education in real estate, but it can give you
enough of a grounding in the basics of marketing, evaluating deals, and negotiating to get you
started working to find and close your first deal. Its true purpose is to initiate your process of
educating yourself about real estate, not to teach you everything you will ever need to know.
Rest assured that you will learn more from putting these principles into action than you will from
trying to passively absorb the information. Real-world experience will be your best teacher, and
by the time you have completed your first deal you will have progressed to a level of
understanding that is worlds ahead of somebody who has read every real estate book ever
published without ever taking any action.
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Most importantly, you will learn that bird-dogging isn't the end-point of a real estate career but
rather it is only the beginning. No matter what area of real estate you progress into, or what
types of investing you ultimately do, the fundamental skills of marketing, evaluating deals, and
negotiating will be the same ones that you developed as a bird-dog.
Furthermore, the network of contacts that you will develop as a bird-dog for putting deals
together will serve you well when it comes time for you to be the major player in the transaction.
Once you develop the skills and the contacts to put deals together for other investors, putting
deals together for yourself will become easy.
This book is not meant to be read as a passive learning experience. Read it while taking action,
not before. If you don't already have specific goals set for your real estate business, take the
time now to decide what you want for yourself and write down specific outcomes. Develop at
least the outline of an action plan for yourself for the next thirty, sixty, or ninety days, or even a
whole year or more. You can fill in the details and make corrections as you go along, but the
more comprehensive your plan and the more diligently you follow it, the better your results are
likely to be.
Finally, if you are thinking about using this information sometime in the future, let the future be
now. Don't wait for a time of better opportunity, because this is an illusion. Don't wait for
personal circumstances to become more favorable, because unless you take action, they never
will. No matter what your personal situation is, the only way to bring yourself to where you want
to be in life is to take consistent action, using whatever resources you have available to pursue
whatever opportunities you can find.
There are always resources hidden inside you and opportunities hidden all around you, and you
will always find them if you diligently seek them out. If all you have available is one free hour
and ten dollars to spend each week, dedicate that to learning and implementing the strategies
described in this book, and you will eventually see results. In trying to reach any destination, the
most important thing is to be moving forward.
Note: Many of the examples in this book are demonstrated with residential real estate.
This is to show the simplicity of the process. The same bird-dogging process applies to
both residential and commercial real estate transactions.
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Chapter 1 INTRODUCTION
Why Be a Bird-dog
Welcome to the exciting and lucrative world of quick turn real estate. If you are a person with an
entrepreneurial spirit and a driving ambition to improve yourself and achieve above-average
wealth, it is not at all surprising that you are attracted to a career in real estate. After all, the
power of this industry to change people’s lives and make wealthy individuals out of Average
Joes is legendary.
However, real estate as traditionally practiced has a few drawbacks for the highly ambitious
individual, including substantial barriers to entry and a long-term maturation process to generate
substantial wealth. This book examines a non-traditional method of doing real estate
business that can not only be used to generate wealth very quickly, but that has very few
barriers to entry and is accessible by nearly anyone with the desire and persistence.
The traditional strategies of real estate investing revolve around two basic practices: rehabbing
and landlording. Rehabbing essentially means that you purchase a property that needs repairs
at a substantial discount, perform the repairs to get a pretty, newly remodeled property, and then
sell it for maximum value.
The shortest you can expect this process to reasonably take in 3-6 months, and it can often take
much longer. Furthermore, you have to be able to either pay cash or borrow money to purchase
the property and pay for all of the repairs, and wait until the property sells to a retail buyer before
you see your profit. Needless to say, many people who would like to get started on a career in
real estate are not in a position to do this.
Landlording involves owning rental properties and holding them for a long time while keeping
tenants in them. If you own a rental property, then the rent your receive should exceed the
monthly mortgage payments, earning you some monthly income, and in ten to thirty years you
can even pay the mortgage off completely, leaving you with a generous monthly income or a
property that you can sell for a substantial profit – if you can last that long! Obviously
landlording is not a short term strategy, nor is it ideal for someone who isn't wealthy yet but
wants to get that way quickly.
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The alternative to traditional methods of investing is quick turn real estate, which is a model that
relies on engineering and closing large numbers of transactions quickly, rather than owning
property for long periods of time. As a quick turn real estate investor, you are looking to put
deals together in a way that creates a profit for you without borrowing money or investing your
own capital. Your profit on each deal may be small compared to that made by those who are
buying the properties long-term, but it comes quickly and you can put together numerous such
transactions simultaneously and in a short period of time. "Get in, get out, collect your profit,
and move on" is the motto of the quick-turn real estate investor. Bird-dogging is the
basic beginning strategy of quick turn real estate.
How to Be a Bird-dog
The main underlying message of this book can be summed up in the single sentence, "Find
investors, work with them, and learn from them." To put it even more succinctly: be an investor's
apprentice.
If you are just starting out in the real estate business, one important thing for you to understand
is that you are not alone in the world. There are active investors already doing business in any
neighborhood where you might consider working. You can learn everything you need to know
about anything you'd like to do by finding people who are already doing what you want to be
doing and modeling them. As a bird-dog you will first be looking for investors to work with and
model, and progressively learning how to put deals together yourself and work on your own.
Bird-Dogging Defined
A bird-dog is a spotter. The role of a bird-dog in real estate is, first and foremost, to recognize
deals and bring them to the attention of investors who can close on them. This definition spans
a range of activities, from basic to advanced. In its most basic form, bird-dogging essentially
means finding leads for one or more investors and getting paid by referral fee (or a per-lead
fee). A basic bird-dog would perhaps collect some information about the lead and then pass it
on for the investor to follow up on and pay a referral fee if it turns into a deal and closes. This is
something that can be accomplished by a person who has time available but little money.
It may be possible to make a decent living as a basic bird-dog if you have a few solid investors
to work with and a reasonable amount of skill in finding leads and collecting information like the
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owner’s name and contact info, repair costs, and market value. However, it's hard to imagine
anyone creating substantial wealth with this limited business model. For this reason, basic birddogging is mainly a transitional “earn as you learn” way to stabilize your finances and make an
entry into the real estate business, whereas advanced bird-dogging is a full fledged business
model with essentially unlimited profit potential.
Advanced bird-dogging is also known as wholesaling. While a basic bird-dog who finds a good
deal will simply pass on the lead and leave the rest of the work to the investor, an advanced
bird-dog, or wholesaler, will make an offer, get the property under contract to purchase, perform
a fair amount of due diligence, and sell it by assignment or double closing to another investor,
leaving little if anything to chance.
Wholesalers in any industry are the people who buy from manufacturers and sell to retailers. In
real estate wholesalers buy directly from a property source and sell to rehabbers, landlords, or
other investors. A few key characteristics of wholesaling in real estate include the following:

Properties are purchased directly from the source (i.e. the property owner) and sold to
investor clients.

Properties are intended to be bought and sold quickly.

Transactions may be done by assignment of contract, double closing, or less frequently
by cash or financing purchase (i.e. the wholesaler actually buys the property and then resells it).

Properties involved are usually in need of work and purchased at a steep discount for
cash with no financing terms (i.e. all cash to the seller at closing).
Much of what can be said about finding deals and buyers applies to both basic and advanced
bird-dogging. Whether you consider yourself a bird-dog or a wholesaler at first is
practically irrelevant, as long as you are gaining valuable experience and moving in the
direction of greater autonomy and greater control over your own deals – for this is
ultimately how you create wealth in the real estate business.
Since the same principles apply to each, the distinction between what classifies as "birddogging" and what classifies as "wholesaling" is not very important, and so for the remainder of
this ebook, the terms "bird-dogging" and "wholesaling" will be used interchangeably.
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A good way to think of being a bird-dog is as an investor's apprentice. It is the stage you are in
while you are learning how the industry works by working on deals that are orchestrated by
others in order to gain experience. But you don't have to learn from just one investor. You can
choose to work with as many investors as you like and learn from all of them, while building a
business for yourself at the same time.
Necessities of Bird-Dogging
Bird-dogging is primarily a networking game, so the main necessity is the ability to network,
which is related to communication and marketing skills. It would be quite difficult to be a birddog if you lived in a cave with no access to communication devices, or if you were severely antisocial. So having access to modern communication technology (phone, fax, email, Internet,
FedEx, etc.), as well as the wherewithal to use it, is the first requirement. Beyond that, ask
yourself if you have, or are you willing to develop, the following abilities that are necessary for
bird-dogging:

the ability to communicate clearly and persuasively with all types of people

the ability to build rapport

the ability to negotiate fairly and honestly

the ability to research, track, store, and access information
You may be wondering if it is necessary for you to be able to drive in order to be a bird-dog.
The answer is, not necessarily; it all depends on how you want to do business. If you want to be
the person driving neighborhoods to look for abandoned properties and place bandit signs,
meeting with sellers to get contracts signed, photographing houses and preparing on-site repair
estimates, then you definitely need to have a car and a somewhat professional, presentable
appearance. However, not all of these roles are always necessary, nor do they always have to
be filled by you, and if you are operating a wholesaling business in a location other than the one
you live in, you will have to find ways to perform these functions remotely.
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For example, leads can be found through newspaper classifieds and online, contracts can be
signed and transferred by fax and email, sellers will often be willing to photograph their property
for you, and buyers will perform their own repair estimates regardless. Plus you can always
team up with a partner who has transportation, so one of you can handle the office work and
one of you can handle the field work. So, if you don't have a car or are not able to drive, you
can still be a bird-dog. If it helps, just start doing business in a different location than where you
live; you will have to learn the market in great detail regardless, and you will always have a valid
reason for not having to meet in person (instead of having to explain why you can't drive to meet
somebody).
Who Should Be a Bird-Dog
As previously explained, the necessities for being a bird-dog are the minimal ones required for
general social mobility. Given that the basic necessities are no obstacle for you, however, if
you:

Enjoy helping people. Successful bird-dogging relies heavily on customer service and
reputation. If you don't provide value to those you do business with and provide a satisfying
experience, your business will fail before it even gets off the ground.

Want to learn about the real estate business but don't have a lot of money to
spend. As a bird-dog you can learn everything you need to know to proceed further in the real
estate business without exposing yourself to substantial risk.

Want to learn about the real estate business and do have a lot of money to spend.
Just because you do have capital to begin with doesn't mean you should risk it on poorly
informed learning experiences. It is better to pretend that you don't have money and find ways
to leverage your time, knowledge, connections, and other resources, so that you will be able to
leverage your capital to greatest effect. Even better than investing your money into a real estate
project that you vaguely understand would be investing it into education and systems for
building a wholesaling business which you can thoroughly understand and control.
Advantages and Disadvantages of Bird-Dogging
There’s no doubt about it, bird-dogging is one of the best starting points for a career in real
estate. Countless investors have begun as bird-dogs only to move on to other niches or to build
an entire business around wholesaling. Some of the main reasons are:
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
Very little training is required to begin; this is a business that you can learn as you go
along.

A bird-dogging business can fund itself. You can start and run it on a shoestring budget
if you are willing to invest time, energy, and imagination instead of money.

There is very little risk involved because you tie up little to none of your own money and
never have to personally guarantee a loan or have your credit profile examined for any reason
whatsoever.

A bird-dogging business can generate quick lump sums of cash.

You can work from wherever you choose, at home or in any location. You can even
operate a bird-dogging business in a different city than the one where you are located.

You only deal with professional buyers rather than selling to the general public.

A bird-dogging business is scalable, meaning you can increase the size of the business
without increasing the amount of your personal labor involved. This means there is no ceiling on
your profit potential.

You don’t have to do any repairs or work directly with contractors (though you will want
to be able to refer them to your buyers).

You operate as a principal in the transactions, meaning you are acting in your own
interest rather than representing your clients, so there are no licensing requirements or fiduciary
responsibilities involved for a bird-dog. (Being a principal means you get paid by assignment
fee or by going on title; check your state licensing laws regarding referral fees if you expect to
get paid on a referral basis.)
So, if bird-dogging is so great, are there any disadvantages? Depending on the long-term
business model you wish to pursue as an entrepreneur, you may find some or all of the following
to be drawbacks:

Your purchase prospects are limited to houses that can be bought for a steep discount,
almost always with repairs needed.
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
You only get paid once from each deal you do; unlike with certain methodologies such
as lease options, there is no residual income or back end profit, just a single paycheck up front
and then you are out of the deal.

You will generally find it more difficult to work, i.e. to find sellers and buyers, the higher
priced the neighborhood is. This means you can’t get by on three or four huge deals per year.
Bird-dogging is a volume business. Think of doing three or four deals per month, or better yet,
per week.
Bird-Dogging Profit Centers
If you start out as a basic bird-dog you are basically at the whim of your buyers, as they
generally have more leverage than you do to determine the amount of the referral or lead fee
they give you. You either get paid a set fee per lead delivered, or you get a set percentage or
dollar amount as a referral fee when a deal closes. Your earnings are protected only by the
quality you provide and by your relationship with your investors.
The main profit center available in bird-dogging comes from the assignment fee you can earn by
contracting on and assigning a property. Typical assignment fees range from $3,000 to
$20,000, but there are no set rules. You might take an assignment fee of $500 in order to
establish a good relationship with a buyer, and you might take one of $50,000 if the opportunity
presented itself. (Presumably you wouldn't turn this down?)
A bird-dog can also earn referral fees for providing leads to an investor. The referral fee earned
by a basic bird-dog will vary with the bird-dog’s experience, relationship with the investor, the
quality of the leads provided, and the amount of information supplied with each lead. For
example, if a bird-dog is getting paid on a per-lead basis by an investor, a reasonable schedule
of fees might be something like this:

$5.00 per Lead:
Address of Property
Owner contact information (if available)
Short description (vacant, tall grass, FSBO, etc)
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
$10.00 per Lead:
Same as above, including picture of property from street

$15.00 per Lead:
Same as above, including owner contact information (looked up from public records if
necessary), interior pictures, repair details

Bonus of $500 - $1500 for any deal that the investor closes
If you are doing your job well as a bird-dog, you will know everybody doing business in your
local real estate market, so you will be able to pass along deals that you don’t find worth
pursuing but know somebody else who might. You will also be able to refer business to
contractors, attorneys, agents, mortgage brokers, and other denizens of the real estate business
ecosystem, who will often maintain a policy of paying referal fees. This broad-based referral
network can become a third profit center of your bird-dogging business.
Real Life Examples
Example 1
While going through aged classifieds you come across a house listed for $90k. After talking with
the owners, you learn that the property is still for sale, and they are tired of dealing with it and
are willing to sell it for $80k. After seeing the house, you discover that it needs minimal repairs
and should be able to sell for $120k. You send the lead to an investor who likes in and ends up
closing on the deal, sending you $3k as a referral fee after the transaction is completed.
Example 2
You get a lead for an inherited property owned by a brother and sister. You estimate that the
value of the property to a home buyer after it is fixed will be about $50k, and that it will take
about $15k to do the fixing. Based on the wholesaling formula (see Constructing an Offer
section) you calculate a Maximum Allowable Offer (MAO) of $15k. You negotiate with the
sellers to purchase the property for $11k. Within a week you have a buyer willing to pay $13k
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for the property. You sign the assignment agreement with your buyer, send the contracts to the
title company, and collect an assignment fee of $2k when the transaction closes.
Example 3
You talk to a sweet old lady who agrees to sell you her house for $50k. She says it’s in pretty
good shape. Several of your investors look at it and all but one say the foundation is damaged
beyond repair. The remaining one offers you $46k for the property. You say to the sweet old
lady, “I know we agreed to pay $50,000 for the house, but we’ve looked at the foundation and
I’m afraid it’s damaged much worse than we believed. The most we can pay you is $40,000.
Are you still interested?” The sweet old lady agrees, you sign a new contract, sign an
assignment agreement with your buyer, and have the title company send you your check for $6k
when the deal closes.
These examples are illustrative of the types of situations that you will typically encounter as a
bird-dog. The amounts of cash involved are small but can be adjusted upwards percentagewise
in higher markets. Two important points to be taken away from these examples are:
If you’re uncertain of the price to offer or how to calculate after repaired value or repairs, just get
a contract for the best price you can get and let your buyers make offers. If the best offer you
get is lower than the price you contracted for, it’s not a disaster, it just means that you
renegotiate with your seller. If you are working with flexible sellers like you should be they will
probably be reasonable.
You don’t have to look at the house yourself. Think about it like this: after 1) negotiating the
lowest price you can with the seller you can either 2) go look at the house yourself, then 3) let
your buyers look at it and 4) accept the highest offer you can get from your buyers after they
look at it, or you can just skip step 2 altogether and go straight to steps 3 and 4. When you
embody this realization it is a major time saver. Look at houses if you enjoy it or feel like you
need to, but when you start to feel like it’s a waste of your time don’t feel guilty about cutting it
out of your routine.
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Bird-Dogging Profit Potential
Suppose you set out to design a wholesaling business capable of closing four deals per month.
Whatever market you are in it is reasonable and conservative to suppose that over time your
business will enjoy an average profit of at least $2,000 per deal. This business would have an
overhead of under 10% and would nearly get you into the six-figure pre-tax income bracket all
by itself.
If that’s not a large enough income to suit your aims, though, take into account the fact that
successful wholesalers in widespread markets around the country typically report their average
assignment fee to be between $10,000 and $15,000. Then just consider that if you want to
increase your income, you simply increase your volume of business.
The profit potential of your business, assuming all other parts are functioning optimally, is
directly proportional to the number of qualified sellers and buyers you are able to contact with
your marketing. This is why it is often said that bird-dogging is not primarily real estate
business, but a marketing business. Though at first you may not be able to make many offers
due to time and/or capital constraints, reinvesting your profits into marketing to bring you more
deals can lead to very rapid growth of your business. Just make sure you keep your education
and business infrastructure up to speed while you’re doing it.
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Chapter 2 FUNDAMENTALS
The fundamental function of a bird-dogging business is to bring together deals and investors in
the real estate market. The more deals you can find and bring to closing, the more money you
can make. The main commodity in this business is not any physical property, but information,
the knowledge of what makes a deal work, who's trying to sell, and who's trying to buy. The
market at any given time is a huge reservoir of information, a bazaar of people with
widely varying needs and situations wanting to buy or sell, deals waiting to be
connected. Therefore, bird-dogging is an information processing business, or more specifically,
a networking business.
You should think of growing your business in terms of building a network, an interconnected
collection of connections to transmit information to the most appropriate places, most efficiently.
As a bird-dog, you are able to create value, and thus profit, by being at the center of a web of
people who all have different resources to offer and need to get connected to each other.
Your Golden Rolodex
Your greatest investment as a bird-dog will be your rolodex, your list of connections with real
estate investors and professionals, as well as all of your deal-finding connections. Your wealth
is not stored in properties or in any static set of data, but rather in your list and the relationships
it represents. The more plugged-in you are to the real estate market in your area, the more you
will be able to keep track of the big picture of business going on in your market, and the more
you will be able to provide value by connecting people, including buyers, sellers, and service
providers, with the resources they need.
Your list is more than a collection of contact information. The strength and value of your
rolodex is only as great as the strength of the underlying relationships it represents.
Creating a reputation, even among the real estate professionals in your market area, is not a
process that takes place overnight, but takes time, patience, and true attention to people and
their needs. Getting deals done is not just a matter of knowing the phone number of an investor,
a contractor, and a title company, but of maintaining functional relationships with these types of
people so that they can be called upon and counted upon in the right circumstances. Your
connections should not only know you and be used to hearing from you, they should have
positive associations and experiences with you, so that you can easily mobilize the appropriate
resources and connections to get deals done smoothly and make everybody involved happy
with the process.
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The core of your golden rolodex will consist of buyers, who are your main clients, as well as real
estate attorneys and title companies, which are among your most important contacts. In
addition, however, you will also want to maintain a personal network of other professionals
involved in the real estate business, such as:

general contractors

real estate agents and brokers

mortgage officers and brokers

hard money lenders

private lenders

inspectors

appraisers

credit repair specialists

loan modification specialists

note buyers

property managers
Trust is Your Greatest Asset
In the real estate business, many opportunities go to the swift, those who are able to quickly and
smoothly mobilize the necessary resources. In order to operate effectively as a bird-dog, you've
got to be able to count on swift, reliable action being taken at your behest in order to get deals
sealed quickly and smoothly. This means that cooperation, especially by investors, lenders, and
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title companies, is essential to your goals. The most important characteristic in a
relationship for inspiring cooperation and congruent action is trust. As a bird-dog, trust is
your greatest asset. Because trust is reciprocally engendered, most of your actions as a birddog should go towards instilling and inspiring trust among your network of contacts.
If you want to be able to trust that your investors will take fast, decisive action when you notify
them of a new deal, they must be able to trust that you will send them deals that are worth
taking action on, and that you will coordinate the process in a way that is too their liking. This, in
turn, will be ensured by you taking decisive action to provide high-quality customer service and
diligently selecting the highest quality deals. The best way to ensure that those you work with
do their jobs well is to do your job well, and ceaselessly cultivate and maintain trust within your
professional relationships. The best way to cultivate trust is to be trustworthy and trusting.
Commerical vs. Residential Real Estate
Most of this book is written from the perspective of, and using the language of,
residential real estate, but this is only for the sake of convention and ease of being
understood. There are two fundamental ways to increase profits as a bird-dog, which are to do
more deals and to do bigger deals. Commercial real estate operates in a closely analogous way
with the residential real estate market, and almost all of the techniques and principles that are
described here can be applied equally well to commercial real estate.
If it is your ambition to pursue $10 million deals, then by all means pursue them. Being a
commercial bird-dog is no different than being a residential bird-dog; in fact, in some
ways it can be easier:

there may be fewer commercial than residential transactions going in in a given market
within a given period of time, but there are also fewer people chasing them, since most investors
limit themselves to residential real estate, making for an overall less crowded environment;

the commercial marketplace is more specialized, meaning you will be dealing with more
seasoned and professional buyers and sellers overall, eliminating many of the possible hangups
and obstacles commonly encountered when doing business with the general public (such as
having to play the role of a counselor and assuage the feelings of civilians involved in real estate
transactions);

financing is generally more readily available and easier to acquire for commercial deals
Page 18
than for residential deals; this is because banks make loans for commercial real estate based on
the income produced by the property, rather than the buyer's personal credit profile;

the finder's fee for spotting or putting together a $10 million dollar transaction will be
substantially greater than the finder's fee for putting together a $100,000 transaction, but
requires approximately the same type and amount of work
The point is not that world of commercial real estate is necessarily inherently better or more
rewarding than the world of residential real estate (although some investors undoubtedly see it
that way), but rather that it is just as easy to walk in. So you should keep in mind while reading
this book that these same principles can be applied to commercial real estate, and don't let
ignorance limit your ambition. If you aspire to be involved in commercial transactions as a birddog, there is no reason that you can't or shouldn't, as this is a perfectly legitimate personal
preference. It is simply a matter of which types of buyers, sellers, properties, and real estate
professionals you target with your marketing and networking. You should choose to do
business where you feel comfortable, but don't let self-imposed limitations hold you back.
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Chapter 3 DEALING WITH BUYERS
The main business activities in bird-dogging are buying and selling. Hence the functionality of
the business can be broken down into two elements, acquiring and exiting from properties. In
this chapter we will focus on the details of finding, qualifying, and working with the investors who
will buy properties from you.
Buyers Are Your Business
Your buyers list is the fundamental basis of your business as a bird-dog. Your buyers are your
primary clients, whose needs you are constantly seeking ways to fulfill. You grow your buyers
list over time by strengthening your relationships with those already on it in the form of learning
more about their buying requirements, thus allowing you to bring them more suitably tailored
deals, and by constantly seeking to add new buyer prospects to your list. In other words, over
time your buyers list should be growing both vertically and horizontally.
When you have a deal available and ready to close ASAP your primary marketing efforts should
be towards your own buyers list. It’s always best and fastest to deal with buyers you know or
have had contact with before. However, you should always be marketing broadly to increase
the size of your buyers list, in addition to getting to know and catering to your existing buyers.
Over time you should be consistently focused on both deepening your relationships with existing
prospects and clients as well as networking to form new relationships.
Contacting Prospective Buyers
Many professional buyers will be easy to find because they market themselves to the general
public, but there are a few other tricks that you can use to go directly to those who do not make
themselves publicly known as well. Here are some of the ways to reach out and make contact
with professional buyers:

Call the numbers on the “We buy houses” signs in your farm area.

Attend meetings of your local investor groups and meet as many people as you can. Be
Page 20
prepared to give out and collect lots of business cards.

Call the numbers from the “We buy houses” ads in your local newspapers, and other ads
in the “Real Estate Wanted” section.

Attend foreclosure auctions and tax sales and network with as many of the buyers there
as you can (don’t forget the business cards).

Call ads for houses and apartments for rent.

Call the numbers of houses you see for sale that are totally rehabbed or advertised as
“rent to own”.

Ask agents, mortgage brokers, title officers, contractors, and other real estate
professionals to refer you to any active investors they know. Tell them that you can bring them
deals, which will mean more business for them. Also send them referrals for the types of clients
they need whenever you can to initiate reciprocity.
Attracting Prospective Buyers
You can attract prospective buyers to contact you as well. Signs in your farm area will attract
buyers interested in the area you are working in. “Handyman special, cheap, cash” or
“Rehabber’s delight” and your phone number are tried and true marketing messages for
attracting investors. The same message that you use on signs can be used in classifieds in
print publications or on the Internet.
Besides general marketing for real estate buyers, you can and should leverage every deal
you get as an opportunity to grow your buyers list as well. Market your deals in newspaper
and internet classifieds and specialized investing forums and websites focusing on your market
area. With every deal you market, you should get at least a handful of prospective buyers. At
most one of these will end up buying the property, but the rest of them should become new
additions to your buyers list.
The ads you run can look something like this:
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"Seeking qualifed investors for quick closings. Wide selection of investment properties
available for purchase. Deals tailored to suit your needs. For information call (phone
number)
Investment property, handyman special, 3-2, 1500 sf. ARV: $150k, repairs $15k, available
for $80k. Call (phone number)"
Besides the ads you run, your business cards and networking skills can allow prospective
buyers to find you as well. Whenever you network at meetings, property auctions, or
conferences, be sure to distribute your business cards profusely and introduce yourself to as
many people as possible. Also make a habit of doing this in your daily life, for maximum benefit.
Profiling Prospective Buyers
Defining Your Ideal Client
You can only find something if you know what you are looking for. Therefore it is important to
define as specifically as possible the ideal type of client you want to work with. Not all investors
are created equal, and your success in starting and building your bird-dogging business will
depend on relationships with quality clients. For starters, your ideal clients will have at least the
following characteristics:
Integrity: You should always feel that you can trust your buyers and have confidence that their
words will be binding and their actions congruent. Avoid working with buyers who treat others
unfairly, even if they seem to treat you well.
High deal volume: If you want to do lots of high-quality deals on a regular basis, then you should
seek out and choose to model investors who do lots of high-quality deals on a regular basis.
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Growing Your Buyers List
Your buyers list is your most valuable asset as a bird-dog. You should have a well-organized
database of every investor or potential investor you talk to, including as much information as
possible. It isn’t necessary to get every bit of information from every investor in the first
conversation, but stay in contact with all of your buyers on a regular basis by phone and/or email
and collect more information over time about their buying preferences, financial situation, and
how they do business.
The more data you have on your buyers the more easily you will be able to put together deals
that meet their needs. Also keep information in your database on every other type of real estate
professional that you come into contact with that you might be able to refer some business to.
The better connected you are, the more people you will be able to help, and hence the more
powerful you will be in your business. Mind this principle by making actively growing your
rolodex a priority.
Types of professionals you will encounter besides other investors will include:

real estate agents and brokers

mortgage brokers and loan officers

hard money lenders

inspectors

contractors

appraisers

title companies

real estate attorneys
Page 23

private money lenders

note buyers

property managers
These are all people you might be able to refer business to and who might be able to refer
business to you, so you will want to have special sections in your database available for keeping
track of their information. By trading in referrals with all types of players in the real estate
game, you can potentially exchange every type of lead you find for good will and/or cash.
Your buyers list should be growing automatically and all the time, even before you have deals
under contract. You don’t have to have deals in inventory to begin talking to buyers. In fact, it's
more effective to get as much information as possible about what investors are looking for
before trying to find your first deal. When you talk to investors, let them know that you’ll contact
them when you have a deal for them to look at. You can’t have too many buyers on your list;
just don’t spend so much time on it that you neglect to actually spend time finding deals! Also
realize that your set of active buyers will be constantly fluctuating as different buyers change
their priorities and experience changes in their financial circumstances, so don’t spend so much
time finding deals that you neglect to update your buyers list. This can be a fine balance to
strike when you're just starting out.
Types of Buyers
Many, but not all, of your buyer prospects as a bird-dog will be rehabbers. Different rehabbers
have different levels of experience and specialize in different types of work. The lightest types
of rehabs require little except paint and carpet and are often referred to as "fluff and buffs". New
rehabbers looking for their first deal often seek these types of properties.
Medium rehabs will need more repairs than a fluff and buff, some rooms remodeled, and
perhaps central heat and air work or a room addition. These tend to be the most popular types
of rehabs, so you are likely to find investors who specialize in this type of project.
Heavy rehabs are too valuable to tear down but still need a lot of work. The whole house may
be gutted, or there may be roof work or foundation work needed. Certain types of investors
Page 24
specialize in these types of properties, which must be bought at an especially deep discount to
justify the high costs of the repairs involved.
In addition to the types of houses they buy, investors differentiate themselves by what they do
with their properties after they buy them. Some rehabbers buy, fix, and sell, which requires a
good market for sales in the neighborhood and a justifiable profit spread.
Investors who hold rental properties are called landlords. Some landlords buy, fix, and rent,
which requires a solid rental market in the neighborhood and high enough rents to cover
mortgage payments, taxes, insurance, maintenance, plus a profit for the investor. Other
landlords, on the other hand, don't like to perform rehabs and prefer to buy pristine properties or
properties that are already tenant-occupied. These investors will be buying based on an
expected anual rate of return.
Real estate speculators are investors who buy and sell based on changes in property value.
They may buy a tenant-occupied property expecting to just break even on the expenses until
they sell the property in a few years, presumably for a substantial profit, or they might buy a
tear-down structure or vacant lot, intending to keep it vacant until prices change.
Buying Criteria
Your investor question list should include information about the area, price range, and type of
property your potential buyers are looking for, the amount of rehab they are willing to handle
(light, medium, or heavy), and their source of financing. Some investors won’t know exactly
what they’re looking for until they see it, and most of these will never see it. It’s okay to have
these people on your list and notify them of new deals, but don’t let tire kickers take up too much
of your time. The best buyers will know exactly what they want and when they see it they won’t
hesitate to put down earnest money and show a proof of funds available to close (POF). It’s
best to work with buyers who are actively buying properties on a consistent basis as much as
possible. Available cash is the best indicator, pre-approval for a hard money loan is second
best.
The more detailed information you can record and track regarding the buying criteria of your
investors, the better the deals you will be able to put together to suit them. Probably the best
way to store this data is with a spreadsheet. You can collect information from each investor
Page 25
over time as necessary, and come up with more specialized data depending on your particular
market, but a list of data such as that on the following page is a good place to start.
Most of these entries are self explanatory. The entry "Referrals" should be used to note any
referrals that can be made for or to this investor. For example, if you talk with an investor who
mentions that he needs a contractor who can work on roofs, you may be able to give him a
referral for one of the contractors in your network. Or if you talk with an investor who specializes
in houses than need foundation repair, you might let him know about a house you know about
from a probate attorney that needs serious foundation work.
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Buyer Information Checklist

Name: ______________________________

Address: ______________________________

Phone 1: ______________________________

Phone 2: ______________________________

Frequency of Deals: __________________________

Price Range: ______________________________

Areas: ______________________________

Property Type:

Property Size: ______________________________

Rehab requirements______________________________

Time needed to close? ________________________________

Prefer to negotiate with seller themselves? ____________________

Referrals: _______________________

Notes: _______________________
______________________________
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Showing Properties to Buyers
If you are working with a house that is vacant and accessible then this will be simply a matter of
telling your investors how to get inside and letting them check it out on their own time. If the
house does not fit this category then other options are to get a key from the seller or if that’s not
possible to coordinate showings with the seller. If your seller has to come unlock the property
for inspections and showings, it is best not to send a buyer unaccompanied unless it’s someone
that you trust and whom you know isn’t interested in stealing your assignment fee. If someone
has to be there to let buyers in then you should only show it to the most interested and qualified
buyers and coordinate it so that they all come at once. There are generally better uses of
your time than running out to the property every time an investor wants to take a look at
it, although this can be a useful opportunity to meet a new client face to face the first time
you do business together, so don't rule out meeting investors at the property altogether.
Providing Financing
Your first preference should always be to work with cash buyers. However, as your birddog business becomes more full service you will deal more and more with buyers who need a
little help with one thing or another, including securing financing for their purchase, in which
case it is helpful to have an understanding of real estate financing so that you can facilitate the
transaction.
There are two types of loans commonly used to buy investment properties, depending on how
long the investor intends to keep the property. The most common type of financing used to
purchase properties for a short-term period of time, usually under 18 months, is hard money.
The most common type of financing used to buy rental properties is conventional financing.
Hard money loans are also called rehab loans. They may be provided by private individuals or
hard money lending companies. The characteristics of hard money loans are short term, high
interest rate, and low LTV (loan to value) ratio. They are called rehab loans because their
typical use is to purchase properties for rehab. After the property is fixed the investor would
either sell the property or refinance it with conventional financing to keep it as a rental property.
Conventional financing is generally used by landlord investors to hold their properties for a long
time. The standard term of a conventional mortgage is thirty years. This is the same type of
Page 28
financing most homeowners use as well. The requirements and interest rates for conventional
financing for investment properties are usually different than those for personal residences,
though. Landlord investors may purchase property with conventional financing, or they may
purchase it with hard money and refinance to conventional financing after performing rehab
work.
You should be able to assist qualified buyers of just about any sort by referring them to a
mortgage broker or hard money lender you have a relationship with. Any time you are working
with a buyer who is using financing you should try to have them work with a source you are
familiar with to minimize unknown factors. The added benefit is that if you refer business to
lenders and brokers, they are likely to refer you business in return.
Negotiating with Buyers
Your main source of leverage with your buyers will come from having multiple backup offers.
The more offers you receive the better position you will be in, both in negotiation and when it
comes time to close the deal. Once you receive a verbal offer from an investor the first thing
you should ask for is a POF. The POF may be a bank statement or a letter from an account
executive at a bank verifying that the buyer has funds available to close. The next thing is to
ask if there are any contingencies. Only when there are funds available and no
contingencies are you ready to accept the buyer’s offer. You should then make
arrangements with the buyer regarding your payment arrangements, whether you are going to
be paid a referral fee or an assignment fee. Once the investor’s purchase price is agreed upon
the amount of your fee should not be an issue, especially if the amount of the contract price plus
your fee will add up to what the investor agreed to pay.
Excelling at Customer Service
The primary function of a bird-dog in a real estate transaction is to make things as easy as
possible for the buyer. This means that providing top-notch customer service should be your
highest priority as a bird-dog, so that your clients will be happy about doing business with you
and will want to do deals with you again and again. High-quality customer service is in the
details, so here are a few important details to pay attention to when dealing with your buyers.

Send high-quality deals only. The purpose of collecting so much information from
Page 29
your prospective buyers is so that so that you can send them pre-qualified leads or deals that
match their buying strategy. Find high-quality leads with good potential to turn into deals, and
hook them up with the buyers they are most suitable for. Get feedback about the leads you
send, and if an investor doesn't like a particular lead, find out why so that you can send better
leads in the future.

Perform accurate due diligence. No matter how thorough you are, you can't save your
investors from having to do their own due diligence to determine the condition of the property
and the profit margin of the deal, but you can prevent them from wasting their time checking out
deals that are no good. Do everything you can to make sure the numbers accurately add
up before sending a what looks like a deal to one of your investors. If there are any major
unknown factors about the property, such as the extent of interior repairs, let your investors
know what they are up front so they can account for them in their analysis of the deal.

Simplify the paperwork. The easier you can make it for your buyer to sign up the deal,
the better. This means you should prepare the documents and forms yourself and have them
ready ahead of time whenever possible. If you are selling a property to an investor by
assignment, have the assignment form prepared and ready for them to sign as soon as the
agreement is made. The same applies to sellers. If you are meeting with a seller with the
intention of getting their property under contract, have the contract already filled out and have it
ready for them to sign as soon as negotiations have been completed.

Eliminate seller hassles. Keep an eye out for potential problem sellers, and protect
your buyers from them by either screening them out or dealing with them yourself. Some sellers
will be rude, uncooperative, or otherwise difficult to work with, or will have personal issues that
will influence the deal, such as when siblings owning a property have a dispute about how the
proceeds from the sale should be divided up. It's best to handle these types of headaches
yourself so that your buyer isn't turned off to doing future deals with you.

Coordinate closing. The elements affecting closing will be the seller's schedule, the
buyer's schedule, the title company's schedule, and the schedule of the lender, if there is one
involved in the deal. If you can keep track of all these different elements and manage to
schedule the closing at a time that is most convenient for your buyers, you will be doing them a
worthy favor.

Provide access to resources. Make a point of being connected so that whatever your
buyers need, you can get. If you have a buyer who likes the look of a deal, but doesn't know
any general contractors who work in the area where the deal is located, find him one. If an
investor doesn't want to close a deal at the title company he previously used because of a
problem he had with it, have a new one to suggest to him. Being plugged into all the resources
of the market allows you to provide enormous value to your buyers in this way, and allows you
to do deals that might otherwise have fallen through the cracks.

Optimize the frequency of your contact. Your buyers should hear from you ofen
enough to remember who you are, preferably with worthwhile deals to present to them. If
Page 30
buyers talk to you once and then never hear from you again, it will be hard to build much of a
reputation in your local market. However, if you contact your buyers too frequently, especially
without good deals to show them, they will tend to ignore your communications. Optimizing the
frequency of your contact is one important key to keeping your buyers happy and responsive.
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Chapter 4 FINDING PROPERTIES AND
DEALING WITH SELLERS
Real estate deals generally fall into two categories based on whether the owner is distressed
(i.e. due to job loss, divorce, etc.) or the property is distressed (as in needing a lot of work).
Deals that you target for your bird-dogging business will usually (but not always) fall into the
distressed property category. The owner may be motivated, in the usual sense of being under
time pressure to sell, but some sellers will be flexible without being particularly motivated. A
flexible seller is someone who is not necessarily under time pressure but is not dependent on
getting the highest possible price for their property and is willing to sell for a price that is
attractive to an investor. Many elderly people, heirs of inherited properties, and landlords will fit
this description. Let’s look in more detail at the types of distressed properties you will be looking
for and the types of areas you will be looking for them in.
Areas to Target
The best way to spot the best deals is to know your market. First be aware that real estate
investing, and thus bird-dogging, takes place in every neighborhood in America and in every
price range. However, investing is most common in low- to middle-income markets.
The advantage to working in a lower priced market as a bird-dog is that motivated sellers and
qualified buyers will be the most plentiful. You can earn larger assignment fees from doing
larger deals, but larger deals are also much less common. Generally speaking, bird-dogging is
easier the lower the price range you work with, until you get into the “war zone”, which is the
worst part of any city, with low values and stagnant or reverse growth.
Low to middle income blue-collar neighborhoods are the most productive farm areas for
bird-dogs, because that's where most investing is done. War zones and high-income
neighborhoods are both niche markets and tend to have a smaller buying pool than moderateincome neighborhoods. Selling houses in either of these types of areas requires specialty
buyers. The advantages to having connections with these types of buyers are that high end
properties turn into highly profitable deals, and distressed properties are VERY plentiful in war
zones.
Page 32
The neighborhood you select should be one you feel safe and comfortable in. If a neighborhood
is improving it will tend to be easier to find buyers and less easy to find deals. If a neighborhood
is tending downwards it will be a little easier to find deals but not as easy to find buyers. You
should have a mind to who you will be selling to and who they will be selling or renting
to. While there are niche buyers in any market, markets with the most buyers, both investors
and retail buyers, will be the easiest to sell in. Here are some of the common characteristics of
the bread and butter neighborhoods for bird-dogs:

Homes have two to four bedrooms, one to two bathrooms, 1,000 to 2,500 square feet

Decent schools

Occupied homes are fairly well maintained

People who can qualify for a home loan would want to live there

Some abandoned and distressed properties are scattered throughout

A healthy mix of owner occupied and rental properties

Monthly rental rates run around 1% of the property value

Reasonable growth potential
Neighborhoods have life cycles, progressing from brand new homes with new residents, to over
time becoming more tenant-occupied, and eventually more run-down, until eventually a new
stage of growth appears. Neighborhoods that are on the upswing of this cycle, when property
values are rising gradually but steadily, are the most attractive to most investors.
Properties to Target
As a bird-dog you will be constantly on the lookout for deals. Your daily routine is like
being a kid on an Easter egg hunt, or a detective on the case. Clues you are looking for are
anything that might potentially lead you to a flexible seller. These are some of the things that
should catch your eye about a house:
Page 33

Tall grass

Spray paint

Piled up newspapers

Neglected notices or fliers on the door

Broken or boarded up windows

Disconnected utilities

Structural damage

Fire damage

Peeling paint

Rotten wood

No curtains and bare rooms

Posted code violation notices
You will want to be alert to these clues as well as others you might think of or notice. For
example, when the utility connections to a property are shut off, there is usually a colored
tag that the utility company places on the meter, which can be spotted from the street.
There is actually an art to spotting prospect properties. Any time a house is empty and
neglected it is most likely a drain on someone’s finances, so such properties often represent
golden opportunities. The ideal situation for bird-dogging is a house that is vacant and
accessible so your buyers can inspect it freely, but very ugly houses may be candidates even if
they are occupied. A house does not have to be advertised for sale to be a prospect. You
should also pay attention to things like garage sales, estate sales, and moving trucks to turn you
on to potential leads. Once you start to notice these types of properties automatically and can
see the pretty house hiding underneath the filth (if there is one) you will have developed a highly
Page 34
profitable condition known as “investor’s goggles”. If you notice this happening to you, take
encouragement.
Abandoned properties make good prospects because a property that is sitting empty is likely to
be a drain on somebody's finances – a homeowner, an investor, a lender, or the county. Nearly
every abandoned property represents some kind of problem to be solved for somebody, and
thus an opportunity to profit for a problem solver such as yourself.
Code violation notices can be particularly helpful. Some municipalities maintain compliance
standards, so that properties that are not adequately kept up will be in violation, subjecting the
owner to potential fines. If you notify the owner of such a property that a violation notice has
been posted, you will certainly have done a good deed, which may be rewarded either by a deal,
an investor for your buyers list, or both.
Farming
One of the best ways to gain experience if you are starting from ground zero is to choose one or
more neighborhoods as your farm area. Factors you should consider are the comfort and
convenience of spending a lot of time in your farm area, but also the presence of deals and
buyers. To select a farm area you can drive through several parts of your city while paying
special attention to clues and signs of investment activity.
When you are considering the selection of your farm area, don’t be shy about getting to know
the neighborhood and the people in it. The more you study and are familiar with the home
values and available inventory in your farm area the more easily you will be able to spot deals.
Learn everything you can about the area, including:

the demographic make up

the school system

common amenities

typical sizes and construction of homes
Page 35

ratio of rental properties to owner occupied properties

the number of properties listed for sale and the average days on market, or DOM, for
listed properties

average sale price per square foot for houses and land

anything else you can dig up or discover
One of the best ways to get a feel for a neighborhood is to actually spend time there looking for
clues. While you are in the neighborhood, notice how people tend to take care of their lawns,
what kinds of cars they tend to have, whether there seem to be a lot of young families or a lot of
retirement age folks. Do people tend to be at home during the day or away at work? What sort
of work do they do? Are many of the houses fenced? How many of them have garages? How
long have people lived in their homes? Are there a lot of new folks? Are there signs of criminal
activity or rampant drug use? Talking to people you encounter in the area can be a good
way to get a feel for the neighborhood, so being outgoing and a good conversationalist
will work to your advantage. If you think this is a problem for you, you are going to have to get
around it one way or another anyway if you want to enjoy profound success in any sort of
business.
A good way to start a conversation is by asking how long someone has lived there. If they've
been around a long time, ask them what changes they have seen, and if they've moved in
recently ask them what drew them to the neighborhood. You can also collect information from
signs for properties for sale and for rent in the area. If any open houses are happening while
you are in the neighborhood, attend them and talk to people.
As well as getting to know your farm area, you want to get it to know you by saturating it with
your marketing message. You can advertise in your farm area by direct mail in the form of
postcards or letters, fliers or door hangers, business cards given out to individuals, bandit signs
or other outdoor advertising, and notices posted on public bulletin boards (in laundromats and
other local businesses, for example). In addition to advertising you can actively work your farm
area by regularly driving the streets, collecting leads, placing your bandit signs and fliers, and
networking (i.e. meeting people). To work your farm area you should have the following kit
permanently stationed in your car:
Page 36

digital camera

dry erase board

clipboard

business cards

maps of the area

spare markers, highlighters, pens, and batteries
Drive your farm area street by street, tracking your progress on the map with a highlighter.
Capture leads photographically with your digital camera, using the dry erase board to record
relevant info within the photograph. Clues to look for include anything that might potentially lead
you to a flexible seller or a professional buyer, such as:

vacant or ugly properties

FSBOs (for sale by owner)

FRBOs (for rent by owner)

FSBIs (for sale by investor)

WE BUY HOUSES and other investor signs

ongoing rehab projects

ongoing construction projects or signs for builders
If you see ongoing rehab or construction projects, walking up with some business cards and
introducing yourself can be a great way to build your credibility and meet potential clients face to
face. Here are some samples of the types of leads you should capture:
Page 37
Abandoned Property Lead
For Rent by Owner Lead
Page 38
For Sale by Owner Lead
“We Buy Houses” Lead
You can also use a clipboard for extra notes in case you need it, but capturing leads
photographically makes cataloging and referencing them easier and is generally more reliable
Page 39
than writing them down. It also allows you to have a picture of the house in front of you later
when you are talking with the seller, making it seem like you have a photographic memory:
“Hi, Mr. Jones, are you the owner of the house at 123 Elm street? That’s the house with
the green paint and the chain-link fence, right? Well I drove by the property and it didn’t
look like anybody was there. I couldn’t see much except that the grass was tall and it
looked like some shingles were falling off the roof. I was wondering if the property might
be for sale?”
You can gather even more information by photographing the houses on each side of the lead
you capture, or by talking to the neighbors to the left, to the right, and across the street to find
out if any of them know how to contact the owner. Though you probably won't want to do this
with every abandoned property, it might be worthwhile to investigate the ones that are
particularly promising.
Some neighborhoods will be more productive than others for certain types of leads. It’s best to
choose a farm area where you can capture at least 20 good purchase leads on a typical day of
driving, say for 2-4 hours. If you are getting less than 10 leads per hour you are probably
not using your time optimally.
If you are handling your own farming and follow up, you should spend enough time farming to
generate plenty of leads to keep you busy, but don’t spend so much time in the field that you
neglect to follow up with all of your leads on a regular and consistent basis. You may need to
spend more time driving neighborhoods at first to build up your database of leads, and less later
on as you are more busy with following up.
Locating and Attracting Seller Prospects
For all ventures there are two basic ways to get in touch with your prospects. You can either
locate and contact them through their advertising or other sources, or you can get them to locate
and contact you through your marketing. We will look at how both of these approaches can be
applied to finding deals, starting with you contacting them first.
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Contacting Seller Prospects
You can locate many sellers through their advertising in the classified ads or other places. It is
easy to make a prospect list by scanning the Sunday classifieds for real estate for sale. Look for
terms like “reduced price”, “seller motivated”, “must sell” or similar clues. You should pay
special attention to ads that have been running for a long time. You can even use classifieds
that have been aged for three months to a year as a source of prospects (readily available from
your local library if you don’t have your own), as well as lists of expired listings (available from a
friendly real estate agent).
In addition your farming will generate a list of seller prospects in the form of abandoned property
leads or properties that are otherwise not on the market and not being advertised by the owner.
The unique benefit of contacting owners of properties that are not on the market is that you are
not likely to have much competition over a particular owner. Chances are you will be the only
investor they are talking with.
There are at least three different ways of contacting these types of owners, and probably more.
One is to leave fliers on the doors of abandoned properties while you are farming stating that
you are interested in buying the property and asking the owner to contact you. Another is to
mail an envelope to the property address with the words “Do Not Forward: Address Service
Requested”. This will instruct the post office to return a notice containing the previous
occupant’s forwarding address, where you can send another envelope or postcard containing
your marketing materials.
Probably the most direct and productive way is to get the property owner’s name from the
county clerk’s office (most have online property records nowadays), look up that person’s phone
number, and call them. There is a bit of skill and specialized technology required to find people,
but if you are not skilled in this art and don’t wish to become so, you can hire this work out. One
option is to use a local private eye who provides this service; another is to use an online service
like findtheseller.com, which provides a skip tracing service tailored to real estate investors. If
you do want to do the database work yourself there are online services such as NetDetective
and Intellius that will provide the information you need for a reasonable fee, which is cheaper
than what a professional skip tracer would charge to supply the information. You can do it
yourself and conserve money, or you can hire it out and conserve time.
Note that a professional skip tracer will provide you with multiple phone numbers and addresses
for the person you are trying to contact as well as possibly relatives and neighbors, but it is up to
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you to actually make contact with the person. Sometimes you don’t have any luck learning
anything until you have contacted the third or fourth relative or neighbor. This is real estate
detective work at its finest.
When you contact a prospective owner you should realize and be prepared for the fact that most
deals will not get made upon first contact. You should look to establish a rapport with the seller
first and to determine if there might be a deal involved second. If you noticed there was a code
violation notice on the property, for example, don’t you think the owner would appreciate being
informed of it? You’re not looking to make a hard sell right off the bat, you’re looking to make
conversation and gather information, all of which makes following up easier and more effective.
Get the owner to talk about what they plan to do with the property. Whatever the answer is, ask
if the owner might consider selling. If the answer is not affirmative for the time being, try to get
permission to call back and check later. Then add the seller to your follow up list, including
notes about the date and time of the conversation and any notable details that were discussed.
That way when you can call back you can make it sound like you remember the conversation
perfectly:
“So Mr. Jones, how is your daughter doing in college?”
Also be aware that some of the people you contact will be interested in buying property
themselves. If you determine from your conversation that this might be the case, treat them as
a usual buyer prospect and add them to your investor database.
Attracting Seller Prospects
There are many avenues of marketing available to real estate investors to attract prospective
sellers. Sellers who contact you first will be uniquely qualified by having responded to an
advertisement to sell their home. The main avenues of marketing available are ads in
publications, direct mail, outdoor advertising, networking and referrals, and the Internet.
Ads
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You can make use of all types of classified ads in printed publications, including newspapers,
magazines, bulletins, and newsletters. Most publications will allow you to buy advertising space
for larger ads as well, but classifieds are a good place to start and possibly to stick with. Factors
to consider are a publication’s location, distribution area, and readership. You want to find the
publications that have the greatest pull with the types of motivated sellers you’re targeting. A
classic ad theme is the one below:
"We Buy Properties – Any Location, Any Condition, Fast Closings – (555-555-1234)"
Direct Mail
Direct mail is another marketing tool commonly used by real estate investors. List brokers are
businesses that provide lists of prospects based on criteria you specify, including geographic
location, home ownership, mortgage balance, age, and any other characteristic you might think
of. You can usually get bulk discounts from list brokers if you buy lots of names at once.
There are many different ways to do mailings, including postcards or letters, handwritten or
typed, for example. Two consistent principles are to test different marketing pieces constantly
and select the ones that work best, and to send repeat mailings to the same prospects. The
response rate from direct mail will be very low (perhaps 1%) on the first mailing but will increase
as you send multiple mailings and people get used to seeing your marketing pieces. If you have
a large enough mailing list, you can cycle through it in batches, say sending only 100 mail
pieces per month, if that's all you can afford. A classic direct mail marketing message is this
one:
"Dear (Homeowner),
I would like to BUY your house. Please call me at (555-555-1234) and I will make you an
offer.
Sincerely
(Name)"
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You might even receive direct mail pieces from real estate investors yourself, if you own your
own home. You should save these pieces for reference, as well as contact the investors that
send them and add them to your database.
Outdoor Advertising
Many real estate investors use bandit signs to deliver their marketing message, but you should
also keep your mind open for other ways to advertise out of doors, such as bench signs and car
signs. Placing outdoor advertising can be a great way to target your advertising to specific
neighborhoods.
Networking
Networking basically means marketing by meeting people and encompasses nearly everything
you do that brings you in contact with people. Always have business cards available, especially
if you are networking actively by attending a function such as a local real estate investor club
meeting. Networking can take place any time you are in the field or around people. Networking
hinges on referrals, so tell everyone you talk to about your active referral program whereby they
can receive a fee for referring you to an active buyer or seller. Also be generous about passing
on referrals, and this will help stimulate more to come your way.
Canvassing
Canvassing goes along with farming. As you farm a neighborhood, blanket the area with your
marketing materials in the form of bandit signs, door hangers, and business cards, and do
anything else you can to plant your marketing message. If there are local businesses, like
Laundromats, that have bulletin boards, post fliers or brochures, for example.
The Internet
The Internet can be used to run ads, develop a website, and provide many more avenues for
bird-dogs to contact prospective clients. Be aware that if you are not informed about the many
ways you can use the Internet to attract sellers then you should go out of your way to become
informed so that you can put this powerful tool to work.
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Profiling Seller Prospects
Your first contact with a seller should serve to allow you to determine whether or not the deal is
worth pursuing. You should aim to gather at least the minimum information necessary to
calculate an offer. You should also aim to determine how flexible or motivated the seller is and
the likelihood of your offer being accepted. There is a bit of skill involved in discerning a seller’s
motivation level, but all it takes to develop this is practice talking to sellers.
There are a few signs that will usually give them away when you come to recognize them, but
just realize that a truly motivated seller will be someone who is in need of your help and is willing
to work with you without resistance. You shouldn’t aim to convert an unmotivated seller into a
motivated one, just recognize the difference and spend as much time as possible with the
motivated ones and as little time as possible with the unmotivated ones.
The information you collect from the seller should include at least a rough estimate of repairs
and market value. This will allow you to calculate an offer. You should also find out how much
money the seller really wants, which will help you to determine the seller’s level of motivation.
Ask the seller something along the lines of “If I can pay cash and close fast, how much would
you have to get to even consider selling this property?” and follow up with something like “Is that
really the least you could accept?”
With a little practice, the answer to a few simple questions should allow you to determine
whether to spend more time on the phone with the seller or whether to put them on your follow
up list and move on to the next prospect. If the lead seems worth pursuing then it is best to
collect as much information as possible for your database. A seller information list such as that
on the following page can be used to fill out your records.
The best way to store and track this information is with a spreadsheet or database where it can
be easily and quickly accessed. The information you gather should be relevant to your
purposes. You shouldn’t burden the seller with too many questions. Just get the basic
information and whatever else you can, then move on. Either present your offer or tell the seller
you’ll follow up with them later and thank them for their time.
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Seller Information Checklist

Date: ______________________________

Lead Source: ______________________________

Owner’s name: ______________________________

Owner’s phone #: ______________________________

Owner’s fax number/email address: ______________________________

Property address: ______________________________

Type of property: ______________________________

Beds/baths/garage spaces: ______________________________

Size (sq. ft.): ______________________________

Lot size: ______________________________

Construction type: ______________________________

Year built: ______________________________

Heating and A/C: ______________________________

Repairs needed: ______________________________

First mortgage balance and payment: _____________________________

Second mortgage balance and payment: ___________________________
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
Other liens against the property: ______________________________

Rental income: ______________________________

Reason for selling: ______________________________

Other properties for sale: ______________________________

Notes: ______________________________
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Estimating Market Value
The primary way to estimate the market value, or ARV (after-repaired value), of a property is to
look at close by recent comparable sales, or sales comps. Licensed agents can get sales
comps from the MLS (multiple listing service), but if you do not have a source for these then
there are other services like realquest.com that will supply the information for a fee.
As you become familiar with your farm area you will develop a sense of property values in the
neighborhood and won’t always need to look at sales comps for properties in your farm area.
And of course you can always ask the seller if they happen to have an appraisal on hand, which
will happen from time to time and can be used to inform your estimation of value.
If you are working in an area where the size and cost of houses varies widely, you can use the
nearest sales comps to calculate an average cost per square foot for the neighborhood, and
multiply that by the size of the property you are evaluating. Often, however, the market value of
a house will be dependent upon more qualitative and subjective factors, like the number of
bedrooms, the aesthetic appeal, and the availability of a garage or parking space, rather than a
strict square foot calculation. When you look at enough properties in a particular neighborhood,
you will eventually get a feel for what the price of a particular property should be.
Estimating Repairs
The first step is to get as much information as possible from the seller about the condition of the
property, but realize that this is not likely to be highly accurate. If the seller can send you
pictures of the property this will help, but many won’t be able to. You can get a more accurate
estimate by having the property inspected yourself and filling out a repair cost worksheet
appropriate to your local market (you can get one of these from another investor you are friends
with – part of the value of networking).
Whoever looks at the property, whether you do it yourself or have someone else take pictures
for you, should take photos of the exterior from all sides and of each room, taking care to show
needed repairs as well as possible. Pay particular attention to the roof and foundation, then to
cosmetic and functional items. You don’t have to have an estimate accurate down to the last
penny. As long as you can tell the difference among a teardown, a gut job, and a fluff-and-buff
you’ll probably be okay. Here is a checklist of important points to guide your observations:
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
When inspecting a property yourself, first observe the neighborhood, street, and block it
occupies. What are the demographic characteristics of the area?

When approaching a property, take note of how easy it is to access and observe the
condition of the premises. Will any landscaping or lawnwork be needed?

Look at the roof of the property from a distance and note its condition. Is it straight or
sagging? Next look at the foundation. Is it flat and level? Are there any cracks visible? The
condition of the roof and foundation are major determing factors for many investors.

Note whether the construction of the house is slab (concrete foundation) or block and
frame (wood foundation with crawl space). Many investors specialize in one type or another. In
wood frame houses, look for signs of termite damage, which would be a major consideration in
the price of the house.

Next look at the windows and doors of the house. Do they need to be replaced or
updated? Cracks around the corners or slanted frames indicate subtle foundation issues.

Inside the house, observe whether the layout makes sense. Does the house have as
many bedrooms and bathrooms as the rest of the houses in the neighborhood? Is the internal
structure intact? Do rooms need to be added or changed? Can the square footage of the
house be increased or a bathroom added? These are typical value-adding improvements that
rehabbers like to make, as are garage conversions (converting an unneeded garage into an
interior room such as a bedroom or game room).

Note the condition of the systems in the house: does it require extensive plumbing or
electrical work? Does it have central heating and air, and does it need them? Can it be
improved to be more energy efficient? Do the kitchen and bathroom need to be updated?
Even if you are not able to estimate exact repair costs, if you take note of all of these items you
will usually be able to give an investor enough information to decide whether not to look at a
deal.
Constructing an Offer
The offer formula used by most investors who buy and sell properties is a very simple formula
based on the ARV and repairs:
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
Rehabber's Maximum Allowable Offer (MAO) = .65 x ARV – repairs
In other words, this says that the maximum allowable offer is going to be 65% of the ARV, minus
the repair costs. So, if a property had an ARV of $100,000 and needed $15,000 worth of repairs
to be made market ready, its MAO would be $50,000. Where does this formula come from?
The industry standard loan to value ratio (LTV) for hard money is 65%-75%. This formula allows
for the investor to purchase the property and complete the repairs for no more than 65% of the
ARV. Depending on market conditions and investing styles, the percentage may vary, but this
figure can generally be used as a benchmark of acceptibility of deal.
This may make it sound as if the investor stands to make a 35% profit, but in actuality the
investor’s profit is more likely to be 10% to 20% of the ARV, with the rest being absorbed by
closing costs when buying and selling, any down payment assistance given to the end buyer,
holding costs, agent fees, loan interest and points, and repair overruns. Investors who are
paying cash generally follow this guideline for screening deals as well, or an even more
conservative one. Note that this formula supplies you with a MAXIMUM allowable offer,
meaning that this is the price below which rehabbers and other investor buyers will be interested
in the property. That means that the offer you make to the seller should be lower than this
amount. How much lower depends on circumstance, but obviously the lower your offer the
more profit you are building into the deal for yourself.
If the above discussion is confusing to you at first, just use 50% of the ARV as a ballpark when
making offers. So if the seller says that the house is worth $100,000 and needs moderate
repairs, offer $50,000. If the seller says the repairs are heavy, offer 40%, or $40,000. This will
usually at least get you close enough to a reasonable basis for negotiation.
Investors who buy properties to keep, or landlords, calculate offers a little differently. They
typically finance their properties long-term with conventional loans, although they may purchase
them initially with private loans or hard money loans. They therefore calculate their maximum
purchase price based on the monthly payments of a 30 year mortgage. You should be familiar
with current mortgage rates and rental rates in your target area in your role as a bird-dog,
as this information will directly affect your buyers' purchase decisions. This will vary
widely in different locales, but a general benchmark for most markets is about 80% of ARV.
Therefore, landlord investors will generally want to buy at or below the figure:

Landlord's Maximum Allowable Offer (MAO) = .80 x ARV – repairs
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Presenting the Offer
A good rule of thumb if you are just starting out is when making an all cash offer the amount
should embarrass you. If it doesn’t embarrass you it isn’t low enough. Seriously, though, you
need to develop a thick skin about this. When a seller asks how much you think you can pay
you shouldn’t hesitate to give an honest answer, and you shouldn’t expect to do deals for free.
One of your goals as a bird-dog is to find deals where you can meet the needs of a buyer, a
seller, and yourself while making a deal happen. If the situation of the deal doesn't allow for you
to easily create a profit for yourself, you should try to refer it to somebody who can close it rather
than take it on yourself. If you make too high of an offer you will at best get a marginal deal and
a marginal paycheck, and at worst you will get a contract that doesn’t go anywhere. Either one
is a waste of your time, not to mention the seller’s. Promising more than you can deliver doesn’t
do anybody any good.
When presenting your all cash offer it may or may not behoove you to bring up the fact that you
are working with other investors who intend to buy the property. It’s all a matter of the seller’s
sophistication and priorities. Some sellers will be comforted by hearing you talk about how
you're going to mobilize the resources to do the deal, while others want to get the process over
with as quickly as possible and just want to make sure they are dealing with a decisive action
taker.
As a good salesperson it is your job to cater to the psychological needs of your client by
presenting a persona that best complements these needs, in the interest of making the process
as easy and stress free as possible. Remember, as a bird-dog your primary clients are your
buyers, but you can't make your buyers happy unless you bring them easy, stress-free deals,
which require happy, satisfied sellers, who deserve the royal treatment as well. Making
everybody you do business with as happy as possible earns karma points in the short
run and referrals in the long run.
In any case, the fact that you are working with other investors to get the seller's problem solved
shouldn't be an issue. If the subject somehow comes up you shouldn’t try to hide the fact that
that’s how you do business, and if the seller has a problem with it, either change tactics (such as
finding out if the seller would be open to accepting an option agreement) or politely decline to
work with them if necessary. If the seller doesn’t bring it up though, there’s no reason you
should. Plenty of sellers wouldn’t even understand the concepts and don't care about the inner
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workings of the real estate investment business and are just happy knowing that they will be
getting a specified amount of cash on or before a specified date.
Understand however, that with great power of influence comes great responsibility. You should
cultivate and project the quality of confidence, but you should also be straightforward with sellers
about what you can do for them. Always take the seller's circumstances and best interests
into account, and realize that if you make a promise you can’t back up then you could
have a major impact on the seller’s life and finances. Never take any chances without the
seller’s knowledge. Let the seller know that your offer is contingent upon inspecting the
property, and make this explicit in the agreement, if you are constructing it.
If at any point it seems like the property is going to be something one of your investors wouldn't
want to purchase, don’t put off letting the seller know this, and do your best to refer them to
someone who can help them. Consider whether they could be helped by an investor who
specializes in cases like theirs, a loan specialist, or a real estate attorney, all of whom you
should have connections to through your referral network.
If you are in the basic bird-dogging stage, your investors will probably construct their offers
themselves, in which case you should be learning from them the elements of constructing offers,
such as what kinds of forms to use and how to fill them out. If you are in the advanced birddogging stage, you will probably have enough experience to fill out purchase agreements
yourself.
An equally valid alternative to a written purchase agreement, useful depending on seller
preferences, is an option agreement, which gives you the option to purchase the property, and
can be written to give the seller leeway to withdraw as well. This might be a better agreement to
use with some sellers, especially those who are professional buyers or landlords. Just let the
seller know that you want to market the property to your buyers and send them the option
agreement, filled out and signed on your end. When you have a buyer ready to purchase and
prepared to set a closing date, a purchase agreement can be filled out.
It is important to be calm and collected when delivering offers. You want to inspire trust and
confidence with your voice and manner. Therefore if you get the jitters when it comes to this
part (which is completely normal for beginners) it might help to role play in a safe environment
until you can do it without breaking a sweat.
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Oftentimes you will be making a verbal offer over the phone, in which case you or your investor
should send the written agreement, signed on your end, immediately afterwards by fax or email.
If you are making the offer in person you should have two copies of the agreement already filled
out and signed and be prepared to talk the seller through it if they have any questions. If there
are multiple owners they should all be present and sign at the same time. This would also be a
great time to get some sort of proof of ownership, such as a copy of the deed, if possible.
One way to get around making offers verbally is to simply collect the seller’s information,
including a fax number or email address, then send your offer afterwards in the form of a filled
out and signed purchase agreement. If they accept your offer you will hear back from them, if
not you won't. If you send out lots of offers this way, you’ll be surprised by some of the ones
that eventually come back.
Filling Out a Purchase Agreement
If you are working under the wing of one or more investors, they will fill out purchase
agreements themselves, or ideally even instruct you how to do it in detail. Once you are acting
as a free agent and filling out contracts yourself, as a wholesaler, there are just a few essential
contract clauses that you will need to be aware of. Your wholesaling purchase agreements
should include:

Assignability: most contracts will automatically be assignable, if not this needs to be
written in; check your state laws for specifics

Purchase price: should specify the amount and cash or financing

Earnest money: should be $100

Property accepted “as is”: the seller performs no repairs and provides no disclosures

Survey, title insurance, and other closing costs: can be attributed either to the buyer or
the seller, or split, as necessary

Closing date: should be as far in the future as the seller will allow, but the sooner it is the
more enticing the offer will be; two to four weeks is a good fast time frame
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
Refund of title search costs: if the seller turns out to not have clear title to the property
then the seller agrees to pay for the title search

Contingent upon inspection: the buyer’s offer is contingent upon a formal inspection of
the property

Sole remedy: in case of the buyer’s default the seller is entitled to the earnest money as
the sole remedy
Your contract may also contain any special provisions you desire, such as a clause to allow the
buyer access to the property for due diligence. You want to avoid any kind of specific
performance clause, which says that you can be forced to buy the house. If you feel uncertain
about anything, consult with investors and attorneys who know the details of contract regulations
in your market until you are sure you're on solid ground with whatever paperwork you use.
In lieu of using a purchase agreement, you can use an option agreement to establish an agreed
upon price while you market the property to your investors. Once you have an investor ready to
purchase, a detailed purchase agreement can be filled out. Note that an option is not binding
upon you, but it does establish the price and terms at which the seller is willing to sell. An option
agreement needs to include the following information:

Purchase price: an amount that the seller is willing to accept if offered for the property.

Option period: the period of time during which the seller agrees to sell the property for
the agreed upon price; this is open to negotiation, and the longer you can get it for, the better it
is for you.

Option extension terms: terms under which the option period can be extended, e.g.
optionor pays optionee $100 for a six month extension.

Option consideration: amount of money given by optionor to optionee, required by some
states to make an option contract legally binding, but should be kept as low as possible, e.g.
$10.

Any special terms: any and all conditions required by the seller, e.g. keep furniture, 30
days to move, willing to finance.
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Note that the use of real estate option agreements are governed differently by different state
laws. The appropriate use of options is something that you should consult with investors and
attorneys in your area of operation about before you offer any option agreements.
Performing Due Diligence
The due diligence period occurs after you or one of your investors has a property under contract
and before it goes to closing. This is where you check out everything you can about the
property, and if you find anything wrong that you weren’t expecting then you get to lower the
purchase price. If you were a full service wholesaler you would do a thorough inspection of
every property before offering it to your buyers, perhaps including ordering a formal inspection
report, termite report, professional repair estimates, and appraisal.
If you are a basic bird-dog, your investors would collect this information themselves, and you
would watch and learn. The more information you provide to your buyers the more value you
provide as a bird-dog. However, you don’t have to be full service when you’re starting out. The
least you must do is make sure your buyers can have access to the property to do their own due
diligence.
The second component of due diligence, besides the physical state of the property, is the title
search. The seller’s unrestricted right to sell the property must be verified before ownership can
be transferred. This is normally handled by a title insurance company or by a real estate
attorney’s office, depending on your state. The title company will do a thorough public record
search and guarantee that the title to the property is clear aside from whatever clouds or
encumbrances they find.
If encumbrances to title turn up, whose responsibility is it to get them cleared? Technically it’s
the seller’s, but as a matter of practicality it’s yours, if you want to get the deal done, though you
should at least be able to enlist the willing help of the seller in facilitating the process. Some of
the problems you might encounter include unprobated wills, uncooperative relatives on title, or
involuntary liens.
Some problems can be fixed easily, some can’t. In any event the title company will inform you
of the conditions necessary for the seller to have clear title. The title company will require an
earnest money deposit to initiate a title search, at least until you establish a dependable
reputation with them. A full service wholesaler would have this done before marketing the
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property, but when you're starting out you can market the property first and have your buyer put
down the earnest money instead of using your own funds.
As a basic bird-dog, your role will be to look for the signs of a deal and lead your investors to
them. As your knowledge increases and you become more able to handle the details and
structure deals on your own, you should naturally progress towards being a full service
wholesaler, where you control all the variables in the deal and present your buyer with a
complete packaged investment.
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Chapter 5 DEALING WITH TITLE
COMPANIES
Reputation is Your Greatest Asset
Title companies, sometime called escrow companies, are the companies that process real
estate transactions. In some states this function is fulfilled by real estate attorneys' offices, but
for simplicity we will lump them all together as title companies. They handle the nuts and bolts
of real estate transactions. If real estate were automobiles, title companies would be full-service
garages.
Most title companies like to run a tight ship, and operate fairly privately. As a general rule they
don't advertise for new clients. In fact, they like old clients better than new clients and prefer to
do business with them. The best way to be introduced to a new title company is therefore by
one of that company's previous clients. It is always best to approach a title company with
two names: the name of a specific closer to work with, and the name of a specific client
that referred you to the closer. If you follow this rule when approaching a new title company,
you will encounter the least amount of resistance in getting your deals processed.
There are two types of clients that title companies try to avoid at all costs: jokers and time
wasters. Jokers are those would-be clients that introduce themselves without a referral, ask for
presumptious terms or favors without establishing a relationship first, and/or try to do funny
deals, where the paperwork is shady or not all parties in the transaction are fully aware of what
is going on. Time wasters, also known as tire kickers, like to poke around, but never seem to
get any deals done. Professionalism and competence are two qualities held in high
esteem by title companies.
The job of the title company in any real estate transaction is twofold: first, to ensure that the
seller has marketable title to the property, known as the title search phase; and second, to duly
carry out and record the exchange of money and title, known as the escrow phase.
To get the process started, you or one of your investors presents the title company with an
excuted purchase agreement, along with an earnest money deposit. The title company then
begins a title search, ultimately resulting in a title policy detailing all ownership interest in the
property, including any liens or encumbrances that may cloud the seller's title. At the same time
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the title company will order a survey of the property if required (which almost all lenders will).
Usually this is specified in the contract as the buyer's expense, but the title company will often
cover the cost up front and include it is a fee at closing.
This process may take from two days to two weeks, as prioritized by the title company. If the
seller does not have clear title to sell the property, or if there are any boundary problems
revealed by the survey, the title company will present a list of conditions necessary for the sale
to take place.
Once saleable title is established the escrow phase begins. If there is a lender involved in the
transaction, the title company will see that all of the lender's conditions for the transaction are
met before closing day. The title company will also ensure for both parties that all terms of the
contract are fulfilled as written, and hold the buyer's funds in escrow until the time of closing,
when it will transfer title to the buyer and funds to the seller simultaneously.
Your job as a bird-dog is to facilitate the job of the title company in any way possible.
You should position yourself as the avenue of communication between the title company and
the buyer and seller. That way you can keep tabs on the transaction as it approaches closing
and deal quickly with whatever glitches or "dirty laundry" arise. Your secondary responsibility is
to develop a good working relationship with the title company, as title companies tend to give
preferential treatment to preferred clients. This may include shorter waiting times or free title
searches, for example.
The title company is where all the hard work you put into your deals comes together. It is said
that "he who controls the escrow is in charge of the deal". Managing this part of the dealmaking process competently effectively puts you in control of your own transactions, which
should be your ultimate goal.
Do's and Don'ts
The following list of do's and don'ts codifies how you should interact with title
companies:

DO ask for referrals to specific closers at title companies from other investors, and use
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these referrals by name when contacting a title company for the first time.

DO bring solid deals.

DO set yourself up as the primary contact person for the closer so that you can
personally stay in the middle of the deal.

DO display professionalism and competence in all of your communications; this will help
elevate you to insider status fairly quickly if coupled with reliable performance.

DO keep tabs on how your deals are progressing and take responsibility for providing
whatever the title company needs promptly.

DO keep the buyer and seller informed about the status of the escrow process and any
responsibilities they need to fulfill.

DO cultivate your reputation and relationship with the title companies you work with to
make future transaction easier. The more deals you can bring to a title company, the more they
will like you.

DON'T position yourself as a potential joker or time waster:

DON'T ask for favors without providing some first,

DON'T open title on deals that aren't assured of closing, and

DON'T participate in any deal without full disclosure to all parties.

DO be respectful of the title company's resources, including the time and energy of the
closer you are working with, and

DO use good manners. Say please and thank you. This may sound obvious, but it is
often neglected and can go a long way.
Overall, your title company contacts are some of the most valuable connections you can
have in your real estate network. Not only are they instrumental in completing any
transaction, they can also become a source of leads and valuable information. For example,
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you may be able to work out an arrangement to get title searches, sales comps, or lists of
defaulted properties from a title company that you have a close relationship with.
You should have a dedicated section of your database for title company contacts, with room to
record new information and keep track of transactions over time. Each time you run into a new
real estate problem (of which there is an endless supply), the advice and referrals that can come
from these relationships can potentially prove invaluable. If cultivated well, these connections
will form a small but vital core of your golden rolodex.
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Chapter 6 COUNTDOWN TO CLOSING
Closing is the point when the deal comes together and everybody gets paid. It’s best to close
with familiar closers whenever possible. If you don’t already have a relationship with a title
company, you will need to develop one (see the previous chapter).
When it comes time to open title ask your buyer which title company they prefer using, and use
that one. If your buyer doesn't have a preference or recommendation, resort to your default
preference. If you are contacting a title company for the first time, you should have a contact
person in mind and be able to mention who referred you. Title companies like to do business
with familiar clients, and if you know somebody they have worked with before it will go a long
way towards getting you past the stranger barrier.
Once the seller and buyer are lined up to close, either you or your investor will open title by
faxing or emailing the purchase agreement and assignment agreement, if one is involved, to the
closing agent. If your investor is putting forth the earnest money then they can swing by the title
company and sign the assignment agreement at the same time as they write the check for the
earnest money. Once title is opened you should stay in touch with the title company to monitor
progress, but expect that it will take one to two weeks to complete the title search.
When the title policy is ready the title company will notify you, and you can schedule the closing
date with your seller and buyer. On the day of closing the buyer must appear, sign, and bring a
check, while the seller must appear, sign, and pick up a check. If you are getting paid by
assignment you can opt to have your proceeds wired into your bank account, so you don’t have
to show up at all, but you might want to do so just for the social contact with your buyer.
Once the due diligence and negotiation between buyer and seller is completed, then, the
checkpoints that must be passed on the way to closing are these:

Execute contract: An agreement is made among buyer, seller, and bird-dog and
formalized on paper.

Open escrow: The executed contract is delivered to the title company along with all
attachments, including earnest money, assignment agreement (if there is one), and POF and/or
lender commitment letter.
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
Clear title: The first requirement that the title company will verify is whether the seller(s)
have the unobstructed right to sell the property. This is in their own interest, because if the title
is obstructed and the deal can't close, then they do not stand to profit from pursuing it any
further until the obstructions are cleared.

Satisfy lender requirements: The next thing the title company will see to is that the
lender's requirements, such as a survey, inspection, etc. are satisfied (optional for cash
transactions). This will ensure that the capital to fund the transaction will be available. If you
pay attention to this aspect of the transaction, you will learn valuable skills that you can use to
help ensure the success of future transactions.

Satisfy contract contingencies: Next, the title company will see to it that the remaining
conditions of the purchase agreement are satisfied, including any contingencies stipulated by
the buyer or seller. As you grow in competence, this is where you will learn to take responsibility
for ensuring the success of the transaction, to make sure that the key participants on the buying
and selling side are happy. After all the work they have put in up to this point, ensuring that the
title company staff doesn't have to deal with any last-minute headaches from the sellers or
buyers will be much appreciated and will suggest your competence to them.

Collect funds: Next to last, the title company will collect funds and signed deeds from
the buyer and lender (if there is one) and apply them towards applicable closing costs, such as
taxes, recording fees, or escrow fees

Disperse funds: Finally, the lender will collect signatures from the seller(s) and disperse
funds to lienholders, assignees, and seller(s), as specified by the purchase agreement.
Developing Control Over Transactions
As a basic bird-dog, you will be watching and learning how transactions are completed. As you
become experienced you will be able to put more of the factors of a deal in place. Gaining more
control over transactions is how you will progress in your career as a bird-dog. As an advanced
bird-dog, or full service wholesaler, you will exercise almost total control over the deal,
orchestrating practically all of the elements, right down to the buyer and seller. The closing
process is the locus of this control. It is at this part of the transaction that you can take
responsibility for making it happen. Don't shy away from learning about the closing process, but
rather view it as your portal to maturity as an investor.
Getting Paid
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As a basic bird-dog, it is important to work with investors who have strong integrity, since you
will be depending on it to earn your profit as long as you only participate as a finder and not as a
principal in the transaction. As you learn to take more control over deals and can become a
principal, by touching title with an executed purchase agreement or option agreement between
you and the seller, you will be able to take more steps to secure your position in the deal.
The most convenient way to get paid is by assigning a purchase agreement to an investor and
collecting an assignment fee from the title company, but you should consult with your own real
estate attorney to construct a watertight and appropriate payment strategy when you are ready
to strike out on your own. As a bird-dog, it is part of your responsibility to see that you provide
value to all parties in the transaction and get paid ethically and legally.
Following Up
Just as important as making sure the closing happens smoothly is following up with all parties
afterwards to make sure everyone is satisfied. If for some reason there is a problem after
closing there may or may not be anything you can do about it, but you should still be aware of it
even if it isn’t your fault so that you will be able to improve the quality of your service. You might
consider placing follow up phone calls or sending thank you notes to the buyer and seller.
Following up thoroughly is one place where excellent customer service really pays off.
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Chapter 7 AVOIDING LEGAL PITFALLS
Three Steps to Avoid 95% of all Legal Concerns
Just three rules, if practiced diligently, will allow you to steer clear of the majority of legal
concerns:
1.
Practice full disclosure. Nothing should be hidden, no business should take place under
the table, and every transaction should be transparent to all parties involved, including the seller,
buyer, lender, and title company.
2.
Never use coercion. Nobody should ever be pressured into signing a contract, or forced
to perform against their best interest. No party should have any reason to regret a deal after it is
completed.
3.
When in doubt, get professional advice. Be certain that contracts are valid before you
execute them. If you are ever uncertain, talk with a real estate attorney or a title company. "It's
better to seek forgiveness than permission" does not apply to real estate contracts.
As an apprentice investor, you should be working under the wing of someone who has
experienced and reliable legal counsel, and as a full service wholesaler, you should have ready
access to qualified legal advice of your own. The best policy, if you feel uncertain about legal
issues, is to avoid potential gray areas entirely and consult with an attorney, adjusting your
business strategy if necessary, until you know you are on solid legal ground. This ebook cannot
provide you with legal advice, but it can point out specific areas where you should pay particular
attention to legal details, and consult with your attorney as needed.
Make Friends With Attorneys
Relationships with real estate attorneys and title companies should be cultivated to form a small
but valuable core of your network of real estate professionals. They can be sources of advice,
assistance, and referrals, and they can be valuable contacts for your prospects or clients who
need them.
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Keep in mind that different attorneys will give different advice, depending on their area of
specialty and past experiences. The best advice for a bird-dog will come from attorneys who
are used to helping investors make a profit. The best way to find such attorneys is by referral
from other bird-dogs or investors you work with.
An attorney who says "You can't do that" in lieu of "I don't know how to do that and I don't feel
like learning" is a poor choice for an ambitious, aspiring new investor to work with. A good
attorney is one who will say "You can do that, and here is the procedure that must be followed..."
A good attorney is also one that will assure that your venture is legally ship-shape. Developing
and maintaining a hand-holding relationship with real estate attorneys and title companies from
the beginning will ensure that you will stay in safe legal territory.
Do You Need a Real Estate License?
If you want to pursue a career as a real estate agent or broker, it is necessary to have a real
estate license. If you want to pursue a caree as an investor, a real estate license has minor
effects, some negative and some positive, which will depend on local laws and regulations. But
in principle, the difference between an agent and an investor is that agents are licensed to
represent other parties in real estate transactions, and thus incur a fiduciary responsibility, but
do not participate as principals in transactions themselves. An investor, on the other hand, is a
free agent participating as a principal in a transaction. A license is required to represent other
people in transactions, but not to participate in them.
There is a similarity between what a bird-dog does and what a real estate agent does, in that
they both work to facilitate real estate transactions. However, a bird-dog and a real estate agent
generally use different methods and pursue different types of clients. Real estate agents, by
and large, work with the general public as clients. Bird-dogs find and facilitate the purchase of
properties by professional investors.
Licensed real estate agents are representatives of a guild system which possesses a monopoly
on the practice of representing third parties in real estate transactions, much the same way
licensed attorneys possess a monopoly on the practice of law. If you want to join the guild then
you have to play by the guild's rules. Being a real estate agent is a different career path than
being a bird-dog or an investor, who act in their own interest and don't represent anybody. So, if
you want to be a bird-dog and eventually an investor, you don't need a real estate license to
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accomplish this. That being said, some investors do leverage the privileges of a real estate
license, such as access to detailed market information, to assist their investing careers.
Types of Contracts
In general, you should not rely on contracts. You should USE contracts for purposes of
articulating and recording agreements, but do not try to RELY on them for enforcing action. Not
only is it likely to be ineffective, it is harmful to long-term relationships, as well as bad business
policy, to use any type of coercion or manipulation to close a deal. All participants in a deal
should be acting of their own free will, in their own best interest, and with full disclosure. If this is
the case then nobody involved in a transaction is likely to cry foul. With that understood, the
following list presents the types of contracts you are likely to encounter or need as a bird-dog
and their uses.

Nondisclosure Agreement/Noncompete Agreement: An NDA is a contract that you
can use to specify your entitlement as a bird-dog, and evoke an agreement from your investor to
keep information shared by you private. A noncompete agreement is a similar contract that
stipulates that the buyer will not try to circumvent you in any deals you bring. Agreements like
these should only be used with investors that you already trust, as they have minimal
enforceability and are therefore only as binding as the integrity of the investor who agrees to
them.

Option Agreement: This is an agreement between a seller and a potential buyer,
stipulating that the seller will sell a property to the buyer at a certain price, as long as the
purchase takes place within a certain time. It is technically binding upon the seller, but not the
buyer. In practice, however, it is normally used to symbolize the seller's approval for the
potential buyer to present the deal to other buyers, and is used as a non-binding placeholder
agreement until an appropriate end buyer is arranged to purchase the property.

Purchase Agreement: Contract used to buy and sell property. Though this could be
written up in many ways, some states will promulgate standard forms, which are best to use if
possible, as they make things easy for the title company. The more standard and
straightforward the contract is the better; solid, straightforward deals usually don't require much,
if any, creative paperwork.

Assignment Agreement: This is a contract that assigns your rights in another contract
that has already been executed. This allows you to sign an agreement with a seller to purchase
a property, and then assign your rights in this contract to another investor in exchange for an
assignment fee. In most states you can assign a real estate purchase agreement or even an
option agreement. Since state laws vary, however, find out what forms other investors in your
market are using, and chat with one of your reale estate attorney or title company contacts if you
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need specific advice about using assignment agreements.
Of course, any agreement or contract that you consider using should be approved by an
attorney. Your title company contacts will come in handy in this regard as well, because they
can give you advice and they may even have contracts that they prefer to use that they can give
you copies of. If you are ever considering doing something in a deal that you wouldn't want to
talk to the title company about, that should be your warning that you are probably approaching a
legal gray area and should change direction.
Clouding Title
A cloud, or obstruction, on a title is a defect that prevents the owner of the property from having
unrestricted rights to sell the property. The basic situation is a lien filed against an owner or
attached to a specific property, which prevents title from being transferred until the lien is paid
off, but there is really an endless supply of possible causes of title defects, including everything
from recording errors to disputed inheritances to identity theft crime.
Another possible cause of title defects is previously executed and unfulfilled contracts. If you, as
a bird-dog or investor, execute a purchase or option agreement with a seller, you can then file
and have recorded an affidavit of contract. This records that the seller has entered into a
binding agreement to sell the property, which will cloud the title. This will ensure that the seller
won't be able to sell the property unless you sign a release for the affidavit, and thus effectively
placing you on title and strengthening your control over the deal. However, this should rarely if
ever be necessary if you are working with buyers and sellers that you trust. An affidavit can be
used as a form of protection when doing business with a new buyer for the first time, but should
never be used for any purpose other than to protect your legitimate interest in an active deal.
Specific Performance
A specific performance clause in a contract states that if one party is in default the other party
has the right to force that party to carry out the terms of the contract. You definitely do not want
a specific performance clause to apply to you, and you shouldn't wish upon others what you
wouldn't inflict upon yourself. If a seller or a buyer gets cold feet, it is better to lose the deal than
to force them to perform. For one thing, doing so would be a form of coercion, and for another,
you should never have so much riding on a deal that you can't afford to walk away from it
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yourself. All actions taken by all participants in all transactions should be voluntary and in their
own best interest.
Getting Paid Legally
Since it is the responsibility of title companies to insure the integrity of real estate transactions, if
you receive your payment directly from the title company, you can be assured of the legal
validity of the transaction. When starting out as a basic bird-dog, however, you may be getting
paid directly by the investor that you are working with, perhaps outside of the closing. Any time
you make or receive payment outside of closing, you should make it your responsibility to
ensure that you are not unknowingly violating any laws. For example, California has restrictive
laws regarding real estate options, and Florida doesn't allow real estate finder's fees to be paid
to anyone but a licensed agent. Other state laws restrict real estate referral fees. As long as
you don't try to hide anything from the title company, they will make sure your contracts and
transactions are in accordance with all applicable laws.
What to Do if Others Don't Play Fair
If you stick to a policy of only doing business with people you trust, then you will almost always
be treated fairly. However, there is always the possibility of being treated unfairly due to
misplaced trust. As a bird-dog this would most likely mean that a buyer closes a deal but
doesn't pay you your agreed fee. This can happen if you have no written agreement with the
investor, or if you have an agreement with no assurance against the buyer's default, such as
clouding title with an affidavit. If you ever find yourself in this situation, the best thing to do is to
simply not deal with that investor any more, and let others in your network know that that person
is not to be trusted.
What you shouldn't do is get involved in a legal dispute over a finder's fee. The moment you
divert your attention away from how to do more business with trustworthy clients, and onto how
to settle the score with somebody who proves themselves to be untrustworthy, you degrade the
quality of your thinking. Always stay focused on getting more and better clients. Good
clients will recognize your value and be happy to reward you for it.
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Scam Signs
Fraud and scams are an unfortunate fact of the real estate business, and sharks and scammers
of various sorts are continually working tried cons as well as inventing new ways to take
advantage of people as a way of doing business. The best protection against the danger of
getting involved in such activities is awareness. If you catch so much as a whiff of any of the
following activities, you should probably end your involvement immediately:

Straw buyers: A straw buyer is a buyer who is duped into buying a deal against their
own best interest, usually so that an illegitimate real estate or mortgage agent or broker can
make a commission. Straw buyers may be foreigners who don't understand English or people
who are simply gullible and ignorant about the real estate business. A deal should never be
made with a buyer who is not fully cognizant of what he or she is doing and fully capable taking
on the financial and physical burdens of ownership of a property.

Under-the-table dealings: Legitimate closings take place at title companies, which
ensures the fidelity of the exchange. All parts of the agreement relating to any deal should be
presented to the title company. If an investor insists that contract addendums or other parts of
the agreement be withheld from the title company's knowledge, you should probably take that
investor off your list and walk the other way. Depending on state law and the nature of the
agreement between a buyer and bird-dog, finder's fees or referral fees may be legitimately paid
outside of closing, but you should consult with an attorney to learn the specifics of how this is
done in your state.

Cash out at closing: A cash out can only happen when a buyer is able to borrow money
to buy a property in excess of what the seller is willing to accept. The buyer borrows the full
amount available and receives the difference in cash upon closing on the property. While this a
legitimate, regular occurrence in commercial real estate transactions, in residential real estate it
is rarely sound and usually not accomplished legitimately. Landlords who legitimately pull equity
out of their properties in the form of cash normally do so by refinancing after they have closed
on the property. An investor who proposes doing a residential deal in this way is highly likely to
be a joker, or at least foolish, and should probably be avoided.

Coercion or deception: Strong-arming and secrecy are almost synonymous with
illegality. Neither sellers nor buyers should ever be maneuvered into doing a deal through the
use of coercion or deception, and all agreements should be transparent and fully disclosed. A
good bird-dog will look after the best interests of all parties involved in a transaction, not out of
legal obligation but as a matter of sound business policy. Don't be willing to let anyone get
taken advantage of on your watch, and bear in mind that anyone willing to misuse other people
will probably be willing to misuse you.

Inflated appraisals: Appraisals should be carried out by an unbiased appraiser, and
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should conform with common sense and your own market research. Corrupt investors, real
estate agents, and mortgage brokers often collude with appraisers and loan underwriters to
inflate their commissions. If such an individual is able to tell their pocket appraiser how much
they want a property to appraise for beforehand, the tail is definitely wagging the dog, and
indicates a situation you should steer clear of.

Avoidance of attorneys: Anybody who is in the real estate business legitimately for a
significant amount of time will invariably have ready access to legal counsel, as should any
investor that you choose as a mentor. If you encounter anyone who suggests or indicates that
their contracts shouldn't or don't need to be reviewed by an attorney, they should be avoided, as
should anyone who avoids consulting attorneys themselves.
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Chapter 8 VIRTUALIZING YOUR
BUSINESS
Entering the Internet Working Generation
One hundred years ago, most people in America went to work on the land, using things like
shovels and pitchforks. Fifty years after that, most people went to work in factories, using
industrial tools. Twenty five years later, most people were working in offices and using paper
and faxes. And at the present time we are entering a period where many people are "going to
work" virtually, using the Internet and other communication technologies. Most types of
business have already found their way onto the Internet, and real estate investing is no
exception. Also, as more types of markets have established a virtual presence, a growing
number of people have learned that they can find things online when they are looking to do
business of almost any kind. Cyberspace has become a thriving and accepted place to work
and do business.
As a bird-dog, it is possible to coordinate your business entirely using phones, faxes, email, and
the Internet. A bird-dog contributes value to a real estate transaction, but does not actually
provide a tangible good or service. Bird-dogging is fundamentally a process of
communication, of marketing and facilitating and orchestrating real estate deals. Modern
communication technology allows you to not only perform these functions from anywhere, but
also design systems to automate the repetitive parts of the process.
One of the implications of this informational mobility is the ability to do business in remote
markets. As a bird-dog, you can always start in a neighborhood near where you live and work
with local investors, but you don't have to limit yourself to your local market. This means that
you can widen the range of your search for investors to work with and learn from when you are
starting out, and widen the range of your search for the best markets to work in when you are
putting deals together on your own.
Two Steps to Putting Any Process on Autopilot
Once you wrap your head around the concept of working in any location, from any location, you
have understood half of the process of virtualization. The other half of the process involves
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designing systems to perform business functions, allowing you to accomplish more as an
individual working in the business, and over time to remove yourself from the performance of the
business functions to spend more time working on the business.
Step 1: Simplification
Simplification is a process of first analyzing your business processes into independent functions.
You can then put systems in place to carrying out these functions. For example, you could
divide your working bird-dog business into the following categories:

marketing for sellers

marketing for buyers

screening prospects

inspecting properties

filling out contracts

making offers and negotiating with sellers

networking with buyers

coordinating closings

website maintenance
When you are new in business chances are you will have to wear most or all of these hats
yourself. As time passes and you gain experience you will be able to systematically delegate
the activities you don’t enjoy doing and focus your time on the ones that contribute the most to
your business performance.
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Note that this is just one way to divide the functions of a bird-dog business. The lines between
activities could be drawn other ways. But regardless of how you draw it up, negotiating with
sellers is probably the most valuable use of your own time, and networking with buyers is
probably the next most valuable. If you were to choose to focus on these two activities primarily,
then the more ways you could use technology and organizational principles to spend less time
getting the other functions done, the better.
Step 2: Automation
Only processes that have been defined and simplifed can be automated. The two fundamental
ways to automate business functions are crowdsourcing and outsourcing. Outsourcing is
delegating other people to perform the function, crowdsourcing is letting your network do the
work.
An example of crowdsourcing marketing is having a prominent referral program. To encourage
people to send you leads you should actively inform them that you pay referral fees for sending
you buyers or deals. Once you have the connections in place to make solid, reliable profits from
the deals you find, you can even pay your own bird-dogs on a per-lead basis, say $5 to $15 per
lead depending on how much information they supply. Bird-dogs can be recruited from any
location, the only requirement being the ability to find deals. (You could even give them a copy
of this book to get them started!)
You should encourage referrals to come to you by sending referrals to others whenever you
can, and you should keep an organized system to keep track of your referrals and pay referral
fees promptly. Thank you notes and other thoughtful gestures help as well. Whatever you do,
don’t rely on your own short term memory to keep track of your referrals if you want to do a lot of
business. Design or find a system that allows you to handle large numbers of connections and
referrals easily. Eventually such a referral network could provide you with a continuous, readily
available supply of deals without you having to do any other marketing.
The other way to automate business processes is delegation. Delegation can employ people,
technology, or services provided by other businesses. Besides the traditional route of hiring fulltime employees, some other options open for delegating are:
Use services: Many types of real estate investing related services have found their way online,
including lead generation, skip tracing, phone banking, answering services, drive-by appraisals,
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direct mailing, and more. Virtual assistant services specializing in real estate can perform many
functions that previously could only be performed by full-time employees.
Use part-time or commission-based employees: These types of employees might include
internet marketers, or bird-dogs that you commission to bring you leads (be sure to provide them
with a copy of his ebook!), or even a real estate agent, hard money lender, or mortgage broker
you team up with to find and close deals. They would also include freelance professionals, like
web designers or copywriters, that you might hire for specific projects.
Form networking alliances with ongoing joint ventures: Real estate investing is best practiced
as a team sport. If you can form a working team with one or more partners, you can drastically
accelerate the growth of your business and overcome any perceived limitation. For example, a
nonlocal bird-dog could team up with a local partner, where each of them agrees to be
responsible for specific roles. Likewise, a physically handicapped person could form an alliance
with a more mobile partner, where one works in the office and the other works in the field. One
partner might have a real estate license, the other a lending license, or one might prefer to deal
with people while the other prefers to deal with properties. The possibilities for cooperative
advancement are truly limitless when you combine your talents with those of a team, and
teaming up like this is a common way for real estate investors to work, both those who are just
getting started and those who are experienced veterans.
Coordinating Closings Remotely
Title companies are accustomed to working with remote clients, so if you do multiple deals with
a title agent without ever seeing their face, they won't think anything unusual of it. Hence
coordinating closings remotely is a snap, and you never have to show up at the title company for
most ordinary deals.
Your role as a bird-dog remains the same, whether you spend any time physically at the title
company or not: to provide the title company with what it needs to close the deal. This is a
matter of coordinating phone calls, emails, and faxes from everybody involved in the deal and
seeing that all other parties are fulfilling their responsibilities.
Signed documents can be faxed or scanned and emailed, or if necessary mailed overnight.
Funds can be transmitted by cashier's checks or bank-to-bank wire transfers. The transfer will
take place the fastest if both buyer and seller show up on the same day to sign papers, but as a
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bird-dog or wholesaler you have fulfilled all of your obligations by the time this happens, and all
you are waiting for at that point is to get paid when funds are dispersed.
Three Keys to Building Rapport Remotely
The art of cultivating relationships without meeting face to face might be called virtual rapport.
Since trust is your greatest asset as a bird-dog, it is important for you to be able to instill all of
your communications with a sense of reliability and connection. Three key qualities that
contribute to establishing virtual rapport are punctuality, accountability, and intimacy.
Key 1: Punctuality
Be rigorously on time and dependable. Note that this doesn't mean you have to be on-call at all
times. What it means is that you should aim to be precise with your statements about time and
follow through with them flawlessly. Being reliable in this way makes you easier to trust and
relate to, which translates into getting you special attention.
Key 2: Accountability
Assume responsibility for making sure deals are moving forward. If a glitch comes up, take
charge of finding a solution. This communicates that you are the one to contact when problems
need to be solved or decisions need to be made, and helps people perceive your competence,
which makes you more trustworthy.
Key 3: Intimacy
Intimacy through telecommunications technology is a matter of recognition. Developing intimacy
involves allowing others to easily recognize you, and letting you know that you recognize them.
It gets noticed when, on the phone, you clearly introduce yourself and find out the name of the
person you're speaking with. It gets noticed even more when you follow up with a habit of
always greeting them by name whenever you speak with them on the phone. Treat everyone
you meet virtually as if you had just met them face to face and will be seeing them again in the
near future. Intimacy is created by any number of thoughtful touches that foster recognition.
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Chapter 9 BIRD-DOGGING AS A
GATEWAY
Bootstrapping Your Business
Bird-dogging is a business that can be started on a small scale and grown to almost any size.
You don’t have to be from a background of privilege to enter the real estate investing business,
but you do have to have patience and persistence. Starting small requires discipline, but there
are no true barriers to entry and no limit to how large you can grow your business.
If you are working by yourself and using only free lead sources it might take you several months
to find your first deal, especially if you are working part time. That’s okay as long as you
understand that you will find one eventually and don’t get discouraged before you do. Browse
the Sunday classifieds, drive a neighborhood once a weekend, do an internet search for
motivated sellers, or purchase a mailing list and send out 50 mailings at a time. Persistence will
net you a deal eventually even if all you can do is take small steps like these.
However, also keep in mind that you don't have to work by yourself or rely solely on your own
resources. You can compound your progress by teaming up with and modeling other bird-dogs
and investors. You shouldn't think that you have to go it alone, or that you have to settle for less
than you want out of your business. Finding the right partners and mentors makes a world of
difference, both in how quickly you learn and how much you earn.
If you want your business to grow quickly, you should not rely on it for your living expenses at
the beginning. The profits from your first and second and third deal you should be reinvested as
efficiently as possible back into your business in order to increase your capacity to do deals, so
that your fourth and fifth and sixth deal will come more quickly and easily than your first three
did.
Money that you invest into your business should first and foremost go into marketing to increase
the rate at which you pull in new buyers and sellers, and second into the systems that will allow
you to handle the increased volume of leads. Marketing and database infrastructure must
proceed in lock step or else your investment will be wasted – you'll either waste leads by having
more than you can handle, or have an excellent system with no leads in it. But by returning
profits and keeping your business methods and systems steadily evolving, the end result of this
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process of bootstrapping will be a highly profitable business that runs itself and provides you
with the freedom to do what you want with the rest of your time and money.
Transitioning to Other Types of Investing
As a bird-dog, you have a selection of investors to choose as mentors, each with their own
strategies for investing, and as an investor you can choose the modes of business that suit you
best. Three common pathways of development followed by investors as they grow their
business are rehabbing, landlording, and commercial real estate.
Rehabbing
To transition into rehabbing, as a bird-dog learn how to quickly and accurately determine repairs
needed and estimate costs. Focus on skills related to improving properties and buying and
selling quickly. Learn how to make closings fast and easy. Find deals for rehabber clients, and
follow them all the way through to learn about every part of the process. Once you have seen
enough go through successfully for other investors, you will be able to apply the knowledge to
put together your own rehab deals.
Land Lording
To become a landlord investor, seek out landlord investors to work with as clients and mentors
and learn what kinds of properties they like to buy and how they like to buy them. Learn how to
calculate mortgage costs and other monthly expenses for properties quickly and accurately.
Focus on skills related to managing multiple properties and maintaining long-term relationships.
Learn how to take your time closing on a property, ensuring that everything is in perfect order.
Once you participate in putting enough of these deals together you will be able to duplicate the
results for yourself.
Wholesaling
Some bird-dogs follow the path of becoming full-time, full-service wholesalers. To make
wholesaling your primary business model, focus on high-volume marketing, cash buyers, and
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engineering all aspects of transactions. Learn about how to become the go-to person for many
different types of real estate professionals, develop close relationships with your title companies,
and find and close many deals very quickly. Also focus on developing networking and referral
systems.
Commercial Real Estate
To become a commercial real estate investor, simply set your sights on the investors involved in
these types of transactions right from the beginning. There's no reason you can't be a
commercial bird-dog, and the process of modeling and mentorship that takes place to learn
about the business is exactly the same. All of the previously mentioned styles of investing occur
in commercial real estate, plus many more. To be a commercial bird-dog, learn about how to
spot leads of interest, how to contact owners and make offers, and the ins and outs of
engineering these types of transactions. Focus on skills related to negotiating and financing.
Since being involved in just one very large deal can potentially boost your standard of living
enormously, quality is more important that quantity in commercial real estate investing.
Continuing Your Education
Wherever you feel you are financially, you must intend to grow and advance. Don't settle for
staying at a fixed level, but work to improve yourself continuously. Growing continuously
yourself is the only way to have a consistently growing business.
An immutable rule of riches is this: income growth follows personal growth. What this means is
that if you want to be bringing more money into your life than you are right now, you have to
become a different person than you currently are. You will not go from a novice to a pro or from
a pauper to a prince without learning a lot and changing a lot as a person. Therefore, education
and self-development are crucial factors supporting your success in growing your business and
increasing your income.
Education is not just a temporary stage, that only takes place at the beginning of your career as
an investor. It should instead be made a habitual part of your ongoing business practices. The
moment you stop learning your business will stop growing, so ongoing education is key to your
business’s long term success. Some of the avenues available to you for continuing your
education in real estate and business principles include:
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
Talk to many different real estate professionals and investors doing business in your
market. Keep your ears open and your mind engaged every day to maintain peak awareness.

Work with other bird-dogs and investors. Partner up on deals to gain experience or take
someone more experienced than you as your mentor.

Attend local investor clubs, workshops, and meetings, and talk to people there.

Avail yourself of the many books, ebooks, home study courses, webinars, seminars, and
boot camps produced by professionals in the real estate education field.

Sign up for email and paper newsletters and news services related to real estate.

Join online investor forums to network and take advantage of the educational materials
they provide.

Keep educational tapes and cd’s on hand to listen to whenever you can.

Share whatever knowledge you have with others. As the ancient Taoists said, “When
one teaches, two learn”.
Your education and your personality together form the vehicle of your success. Don’t let a
limited self concept keep you from enjoying your full potential. If you don’t think you have what it
takes to accomplish your goals then you simply must mold yourself into an individual who does.
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Chapter 10 CONCLUSION
With enough common sense and practice, anyone can begin a career in real estate as a birddog and end up very wealthy in a wide variety of ways, with a wide variety of sound and flexible
business models.
This book is intended to be a user's manual for the process, but that means that in has to be
used. Learning without taking action won't change much about your life, but USING the skills
you have learned to find the best people, resources, and opportunities available to you can
change everything.
So get started...
See you at the top!
Your mentor,
Monica Main
www.monicamain.com
mm@monicamain.com
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Bird-Dog's Action Plan
To keep you on track for the long term, here is a road map for being a bird-dog to go along with
your user's manual, consisting of three signs of progress.
Sign # 1: Find investors who are doing the type of business that
you envision doing
Finding one good mentor to learn from is worth hundreds or even thousands of hours spent
learning on your own. Seek out and cultivate as many relationships as possible with people in
the market you are interested in who are doing business the way you want to be doing business
using marketing and networking. These people will be honest, reliable, above-board, and
financially free as a result of their chosen profession.
Sign # 2: Form Mentor-Apprentice Relationships
Establish mentor-apprentice bonds with the investors you work with. These relationships can
pay off well in the short term as you earn referral fees and/or finder's fees, and even better in the
long term as you develop lasting business connections.
Sign # 3: Start doing your own deals
As you learn to put deals together with and for your mentors, as long as you are developing your
own resources along the way, you will naturally progress towards putting them together for
yourself. This is a positive sign of growth, and when it happens you should congratulate
yourself for being on track to reaching your fundamental goals as a bird-dog.
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EXTRAS
Common Questions New Bird-Dogs Ask
Q. Will I need earnest money?
A. No, but it can come in handy on occasion if you have it. Usually you should sign contracts
with $100 of earnest money unless there is some compelling reason to use more, and you can
normally let your buyer supply the earnest money to the title company.
Q. Do I need to get a real estate license?
A. Only if you want to be a real estate agent. Generally, if you have the right to own real estate
then you have the right to make offers on properties and the right to assign contracts. As a birddog you participate as a PRINCIPAL in the transaction, meaning that you are involved directly,
not as a representative of another party, and thus do not need a license. A real estate agent
has a fiduciary responsibility to his or her clients, whereas a bird-dog doesn’t claim to represent
his or her buyers, only to bring them good deals.
Q. How do I get access to properties to inspect them once I have them under contract?
A. Generally speaking, you don’t have to. Your buyers will need to look at the property, but if
you work with vacant, accessible properties then this is easily arranged. If you have to get the
owner’s permission each time you want to show the property to a prospective buyer it is more
tricky, but this can still be accomplished with skillful negotiation.
Q. What happens if I misestimate the repairs?
A. Nothing bad except that you get lower offers from your buyers than you expected. Listen to
your buyers’ feedback any time you show them a property so you can incorporate it into future
repair estimates. Also make a habit of accounting for a margin of error in repair costs.
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Q. Will I be in default if I sign a contract and can’t close on it?
A. Not if you have an appropriate contingency in your contract. Your seller should understand
that you have to look at the property (or have your buyers look at it) before you can guarantee
you will close. If you do run out of time the seller may be willing to allow you to have more time
to perform, or if not the seller has a right to demand the earnest money as the only remedy. If
you are on good terms with the seller you should be able to handle this with no hard feelings
either way. Maintaining a good reputation and treating people with integrity is your primary
defense against being sued. But don’t be afraid that someone can force you to buy a house,
because they can’t.
Q. What if I assign a property to a buyer who doesn’t perform?
A. You should be ready for this by always having a backup. Continue to market each property
until it closes and you have received the funds, or even as long as it continues to get you calls
from new investors. Having multiple backups gives you negotiating leverage with both the buyer
and the seller and allows you to change plans on short notice. However, you should also be in
tune with the financial situations of your buyers, and before you do an assignment with an
investor verify that they have the cash available to close. They might show you a printed POF
letter, or you might contact their banker directly, or ask an escrow agent they have worked with if
they have closed previous transactions with cash.
Q. What happens if I assign a contract and the seller defaults?
A. If for some reason a seller signed a contract but didn't show up at closing, the title company
would refund the earnest money to the buyer. However, good communication with the seller in
the time leading up to closing will minimize the chance of something like this happening.
Q. How do I protect myself from having my assignment fee stolen?
A. Stealing your assignment fee would mean that the buyer and the seller collude to do the deal
without you. While this is not as common as one might guess, it does happen under the right
circumstances. There are no guarantees that people will be honest, but there are measures you
can take to look after your interests. As a bird-dog, a nondisclosure/noncompete agreement can
specify expectations, but has little enforcement value. As a wholesaler, having an active, signed
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purchase agreement with the seller is of primary importance. You can make this agreement a
matter of public record by recording an affidavit of contract, which will effectively cloud the
seller’s title, making it impossible for them to sell the property to anyone without your consent.
This should only be used when called for, however. As always, the most important factor is the
human one. Maintaining good relationships with your sellers and buyers and providing a
valuable service is your best assurance of fair play.
Staying in the middle of and if possible in control of the deal is also important. This means that
you should be aware of everything that is going on and be the one to coordinate and notify the
other parties involved about the closing process. And finally, treat everyone you meet with
integrity and honor and these are likely to be returned to you, and keep multiple deals active all
the time so that you won’t be too dependent on the outcome of any one deal. If you lose an
assignment fee it shouldn’t be the end of your world.
Q. What is a double closing?
A. A double closing is where you buy a property and sell it in the same day. In contrast to an
assignment closing, which involves a purchase agreement and an assignment agreement, a
double closing involves two purchase agreements. A double closing will incur extra closing
costs for. As a wholesaler, this is something you might use if you felt that the appearance of an
assignment agreement would disrupt the consent of the seller or buyer. A double closing will
not reveal the amount of the wholesaler's profit to the buyer or the seller, and is appropriate
when you are making a large profit (over $10,000) from a single deal and working with a familiar
closing agent. If you encounter a situation where you think a double closing would be called for,
a trusted closing agent will explain the requirements and walk you through it.
Q. How do you deal with title problems?
A. If there are any defects on the title of a property, the title company will let you know what
they are and what must be done to remove them. For example, liens must be paid off by the
seller or negotiated to be released, un-probated inherited properties require an affidavit for
transfer without probate, and recording errors must be corrected. If title issues cannot be easily
corrected any other way, a suit to quiet title may be called for. This will require an investment of
time, money, and energy, but is worthwhile when there is a large profit that stands to be made
on a deal that has irresolvable title issues.
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Q. How do you tell the difference between serious buyers and time wasters?
A. The best and most serious buyers will make purchase decisions quickly, and readily present
proof of their ability to purchase. They generally won't have to ask a lot of questions about deals
and will have everything they need to close ready to go. If you ask them questions like how
many deals they do per month, how quickly they can close, and where the funds will be coming
from, they won't hesitate or have any difficulty answering.
Time wasters may be wannabe investors who are "just looking" and not ready to buy,
other bird-dogs who aren't sure if they can sell the property, or jokers, who want to do
funny deals or keep their true intentions hidden.
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Common Mistakes New Bird-Dogs Make
Problem: You’re getting contracts, but you’re not able to sell them.
Solution: Listen to your buyers’ feedback. Ask if they are willing to buy the property at any
price. If not, is it the area that is a turn off, the type of property, the amount of repairs, or some
other factor? Adjust your marketing and buying strategies according to your buyers’
preferences. Also make sure you are showing properties to plenty of buyers, and to the right
ones. For every buyer who wants a property there will be nine who don’t.
Problem: You’re agreeing to pay too much.
Solution: Get over the embarrassment of making low cash offers. It may take some practice to
be able to deliver realistic offers to sellers, but once you get the hang of it you will be able to do
it without batting an eye.
Problem: Agents are getting in your way.
Solution: If you want to work cooperatively with an agent, there are plenty out there, so look for
ones you are compatible with and avoid the rest. Otherwise you could just make a policy of not
working with agents, which is what many bird-dogs do.
Problem: You are uncertain about repair costs.
Solution: Make sure your contract has an inspection contingency, and make sure your seller
understands this, then understand that the repairs are mainly your buyer’s concern, and they
should make their own repair estimates regardless. Just let your buyers make offers, and if you
have to renegotiate with the seller you won’t lose face if you point out to begin with that you will
have to verify the repairs needed before proceeding to closing.
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Problem: You’re not taking action because you think that you have to have money to
make offers.
Solution: Stop thinking that! You don’t have to have the money to close to make offers. And
as a bird-dog you won’t have any money unless you are making offers. So don’t let this hold
you back. The more offers you make the more results you will see.
Problem: You’re dealing with unmotivated sellers
Solution: Pay attention to how you prescreen your sellers. You should determine as quickly as
possible which ones are not motivated (most of them) and which ones are (a minority), and
spend as little time as possible with the former and as much time as possible with the latter.
Deal with the prospects, kick out the suspects.
Problem: You’re not able to make enough offers.
Solution: Increase your lead generation so that you can spend more time making offers and
negotiating, as this is where the majority of profits will be created in your business. Assuming
everything else is equal, the more offers you make the greater your profits will be.
Problem: You’re not able to keep up with follow ups the way you should.
Solution: Create an organized follow up system, such as a calendar or tickler file, to keep track
of everyone you talk with and systematize your follow up. Most business is done only after
repeated contacts, so the follow up is where the fortune is.
Problem: The offers you are getting from your buyers are too low.
Solution: Either renegotiate with the seller to lower the price, or realize that you contracted too
high with an unmotivated seller and resolve to do better next time.
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Real Estate Glossary, Bird-Dog’s Edition

After Repaired Value (ARV) – The market value of a property when it is in move-in
condition.

Affidavit and Memorandum – A recorded statement that a contract to sell a property
has been executed.

Agent – A licensed real estate professional, who has a fiduciary responsibility to their
client.

Assignment of contract – The act of assigning the rights granted by a written
agreement to a third party.

Assignment fee – Fee paid from the assignee to the assignor in exchange for
contractual rights.

Cash flow – Monthly income produced by a property. For typical rental property, the
formula is: cash flow = net rental income – principle, interest, taxes, and insurance (PITI) –
maintenance & management – vacancy allowance

Cash offer – Offer for all cash; should be at or below 65% of ARV, minus repairs.

Civilians – Individuals involved in real estate transactions who are not real estate
professionals, usually retail end-buyers.

Clouded title – An encumbrance on title that prevents an owner from selling, such as a
lien, affidavit, or defect.

CMA – Comparative Market Analysis, usually prepared by an agent, to show the value of
a subject property.

Contingency clause – A clause in a contract that stipulates conditions for buying; e.g.
“Subject to inspection”, “Subject to approval by partners”. Can also stipulate selling
contingencies, i.e. "Buyer must present POF within 48 hours".

Contract – Written agreement between parties to do business, executed with
signatures.
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
Conventional Financing – A typical thirty year mortgage loaned by a bank or mortgage
company.

County detail report – Publicly available county property records containing details and
tax assessed value for real property in a given county.

Double closing (double escrow) – Buying and selling a property in the same day.

Due diligence – Physical inspection of a property and verification of critical numbers:
ARV, repair cost, rental rate.

Equity spread – The difference between the lowest price a seller will accept and the
ARV; the potential profit for the investor.

Farm – A neighborhood that you select to target your marketing efforts in.

Fluff and buff – A property that needs minimal rehab, usually paint, carpet, and
cosmetics.

Handyman Special – A rehab project waiting for the right investor to come along.

Hard money – Rehab financing; generally short-term, high-interest, non-recourse,
secured by property, 70% LTV or below.

Joker – An investor who skirts or outright delves into moral or legal gray areas, whether
out of foolish ignorance or maliciousness. Not necessarily an outright scammer, but definitely
falling on the same spectrum. Avoid when spotted.

Investor – Buyer who buys professionally or for profit; also a person who participates in
or facilitates real estate transactions for profit, such as a bird-dog or wholesaler.

Landlord – Investor buyer who follows a buy, fix, rent buying pattern.

LTV – Ratio of a loan to the value of the property securing it; a $70,000 loan on a
$100,000 house would be 70% LTV.

MLS – Multiple Listing Service; listing service used exclusively by real estate agents.
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
Motivated seller – Seller in a need-to-sell situation (job transfer, pending foreclosure,
divorce, etc), as opposed to want-to-sell (upsizing to larger home, want to move to better school
district, just seeing what we can get, etc).

Option offer – Option contract, which gives you the right to buy, but not the obligation.
This is generally used as a marketing tool rather than with the intent to purchase

Optionor – Person who sells or grants an option to purchase; the eventual seller of the
property.

Optionee – Person who is granted an option to purchase, usually the bird-dog or
wholesaler.

POF – Proof of funds, shown by buyer to demonstrate ability to close.

Quiet title – A suit to quiet title is a legal action that is used to clear the title of a property
with irresolvable title issues.

Rehab – House that needs at least some work to be livable or to be sold on the retail
market.

Rehabber – An investor buyer who follows a buy, fix, sell pattern.

Repairs – The cost of the repairs necessary to make a home move-in ready.

Retail buyer – Buyer who buys to have a place to live.

Tear down – A property that is too damaged or run-down to repair and thus has no
value. Rather than a repair cost, a tear down has an associated demolition cost.

Title – Ownership of property as established by public record.

Title company (title insurance company) – A business that handles the details of real
estate transactions, where properties are bought and sold. In some states, this will be a real
estate attorney's office, in others it will be a separate business.

Title policy – An insurance policy underwritten by a title company at the time of
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purchase of a property, guaranteeing the new owner's claim to clear title.

deal.
Turnaround time – Amount of time elapsed between finding the lead and closing the

Wholesaling – The art of buying cheap and selling to investors, or generally any
strategy that involves marketing contracts rather than taking ownership of properties.
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Real Estate Peak Performance Library
In addition to reading and learning everything you can about the real estate business and your
target market area, you should also attend to your general entrepreneurial education. The
books listed in this section contain knowledge that you can apply directly to supercharging your
real estate business and your life.
CONTENTS
The Four Hour Workweek – Tim Ferriss
Secrets of the Millionaire Mind – T. Harv Eker
3 Steps to Yes – Gene Bedell
Permission Marketing – Seth Godin
Guerilla Marketing – Jay Conrad Levinson
Influence: The Psychology of Persuasion – Robert Cialdini
Unlimited Power – Tony Robbins
To Be or Not to Be Intimidated – Robert J. Ringer
Page 92
Sample Contracts
These contracts are provided for illustrative purposes only. We do not suggest that you use
these documents to enter into legal agreements, but use them as examples in designing or
selecting your own documentation, which should be done with the guidance of a real estate
attorney who can help you adjust you business policies to account for current, local laws and
business conditions. Under no circumstances should you enter into any agreement that has not
been approved by your attorney.
Examples of the five main tools in the bird-dog's contract toolkit explained in this book
are presented on the following pages:
Option Agreement – for making temporary marketing arrangements to help a seller find a
buyer
Purchase Agreement – for formalizing the agreement to buy
Assignment Agreement – for transferring an executed purchase agreement to an investor
Affidavit and Memorandum – for recording contracted interest in a property, when necessary
Finder's Fee Contract -- for making sure you get paid!
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Option to Purchase Real Property Agreement
Date: _______________
This option agreement is entered into between the Parties, Seller(s) and Buyer(s), below in
consideration of and subject to the following terms and conditions.
1: Parties: ________________________________________ and/or assigns as Buyer and
________________________________________ as Seller
2. Property Address: _____________________________________
3. Offer: Buyer has the option to buy the property at $_________
4. Period: _______________
5. Provisions:
- Seller understands that Buyer’s intention is to find an End-Buyer and assign this Option
Agreement to that End-Buyer for a fee (paid by the End-Buyer).
- Seller understands that Buyer is acting as a principle in the transaction and is not
working as a licensed real estate broker representing anyone in the transaction.
- Upon Buyer’s decision to exercise this option, both parties agree to move forward with
the necessary standard purchase and sales agreement.
- Seller may cancel this agreement at any time if they find their own buyer or tenant or
decide not to sell.
- If Buyer does not acquire an End-Buyer to assign this deal to within ____ days of
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acceptance of this Option Agreement, this agreement becomes null and void.
- All parties agree that property is being sold in “as is” condition unless noted otherwise.
6. Seller Added Comments: ____________________________________________________
________________________________________________________________________
Buyer: _________________________________________ Date: __________________
Seller: _________________________________________ Date: __________________
Seller: _________________________________________ Date: __________________
NOTICE
The information in this document is designed to provide an outline that you can follow when
formulating business or personal plans. Due to the variances by many local, city, county and
state laws, we recommend that you seek professional legal counseling before entering into any
contract or agreement.
Page 95
Agreement to Sell Real Estate
________________________________,of __________________________________ as Seller,
and ________________________________,of __________________________________ as
Buyer, hereby agree that the Seller shall sell and the Buyer shall buy the following described
property UPON THE TERMS AND CONDITIONS HEREINAFTER SET FORTH, which shall
include the STANDARDS FOR REAL ESTATE TRANSACTIONS set forth within this contract.
1.
LEGAL
DESCRIPTION
of
real
estate
located
in
____________________________________________________________________________
____
County, State of _________________________________:
2. PURCHASE PRICE ___________________________________________________ Dollars.
Method of Payment:
(a)
Deposit
to
be
held
in
_____________________________________$_______________
trust
by
(b) Approximate principal balance of first mortgage to which conveyance shall be subject, if any,
to
Mortgage
lender:________________________________________________
$_______________
Interest __________% per annum Method of payment _________________
(c)
Other:
$_______________
_______________________________________________________
(d) Cash, certified, or local cashier’s check on closing and delivery of deed (or such greater or
lesser amount as may be necessary to complete payment of purchase price after credits,
adjustments
and
prorations).
$_______________
3. PRORATIONS: Taxes, insurance, interest, rents, and other expenses and revenue of said
property shall be pro-rated as of the date of closing.
4. RESTRICTIONS, EASEMENTS, LIMITATIONS: Buyer shall take title subject to: (a) Zoning,
restrictions, prohibitions, and requirements imposed by governmental authority, (b) Restrictions
and matters appearing on the plat or common to the subdivision, (c) Public utility easements of
Page 96
record, provided said easements are located on the side or rear lines of the property, (d) Taxes
for year of closing, assumed mortgages, and purchase money mortgages, if any, (e) Other:
____________________________________________________________________________
___________________________________________________. Seller warrants that there
shall be no violations of building or zoning codes at the time of closing.
5. DEFAULT BY BUYER: If Buyer fails to perform any of the covenants of this contract, all
money paid pursuant to this contract by Buyer as aforesaid shall be retained by or for the
account of the Seller as consideration for the execution of this contract and as agreed liquidated
damages and in full settlement of any claims for damages.
6. DEFAULT BY SELLER: If the Seller fails to perform any of the covenants of this contract, the
aforesaid money paid by the Buyer, at the option of the Buyer, shall be returned to the Buyer on
demand; or the Buyer shall have only the right of specific performance.
7. TERMITE INSPECTION: At least ____ days before closing, Buyer, at Buyer’s expense, shall
have the right to obtain a written report from a licensed exterminator stating that there is no
evidence of live termite or other wood-boring insect infestation on said property nor substantial
damage from prior infestation on said property. If there is such evidence, Seller shall pay up to
three (3%) percent of the purchase price for the treatment required to remedy such infestation,
including repairing and replacing portions of said improvements which have been damaged; but
if the costs for such treatment or repairs exceed three (3%) percent of the purchase price, Buyer
may elect to pay such excess. If Buyer elects not to pay, Seller may pay the excess or cancel
the contract.
8. ROOF INSPECTION: At least ____ days before closing, Buyer, at Buyer’s expense, shall
have the right to obtain a written report from a licensed roofer stating that the roof is in a
watertight condition. In the event repairs are required either to correct leaks or to replace
damage to facia or soffit, Seller shall pay up to three (3%) percent of the purchase price for said
repairs which shall be performed by a licensed roofing contractor; but if the costs for such
repairs exceed three (3%) percent of the purchase price, Buyer may elect to pay such excess. If
Buyer elects not to pay, Seller may pay the excess or cancel the contract.
9. OTHER INSPECTIONS: At least 15 days before closing, Buyer or his agent may inspect all
appliances, air conditioning and heating systems, electrical systems, plumbing, machinery,
sprinklers, and pool systems included in the sale. Seller shall pay for repairs necessary to place
such items in working order at the time of closing. Within 48 hours before closing, Buyer shall
Page 97
be entitled, upon reasonable notice to Seller, to inspect the premises to determine that said
items are in working order. All items of personal property included in the sale shall be
transferred by Bill of Sale with warranty of title.
10. LEASES: Seller, not less than ____ days before closing, shall furnish to Buyer copies of all
written leases and estoppel letters from each tenant specifying the nature and duration of the
tenant’s occupancy, rental rates, and advanced rent and security deposits paid by tenant. If
Seller is unable to obtain such letters from tenants, Seller shall furnish the same information to
Buyer within said time period in the form of a seller’s affidavit, and Buyer may contact tenants
thereafter to confirm such information. At closing, seller shall deliver and assign all original
leases to Buyer.
11. MECHANICS LIENS: Seller shall furnish to Buyer an affidavit that there have been no
improvements to the subject property for 90 days immediately preceding the date of closing,
and no financing statements, claims of lienor potential lienors known to Seller. If the property
has been
improved within that time, Seller shall deliver releases or waivers of all mechanics liens as
executed by general contractors, subcontractors, suppliers, and material men, in addition to the
seller’s lien affidavit, setting forth the names of all general contractors, subcontractors,
suppliers, and material men and reciting that all bills for work to the subject property which could
serve as basis for mechanics liens have been paid or will be paid at closing.
12. PLACE OF CLOSING: Closing shall be held at the office of the Seller’s attorney or as
otherwise agreed upon.
13. TIME IS OF THE ESSENCE: Time is of the essence of this Sale and Purchase Agreement.
14. DOCUMENTS FOR CLOSING: Seller’s attorney shall prepare deed, note, mortgage,
Seller’s affidavit, any corrective instruments required for perfecting the title, and closing
statement and submit copies of same to Buyer’s attorney, and copy of closing statement to the
broker, at least two days prior to scheduled closing date.
15. EXPENSES: State documentary stamps required on the instrument of conveyance and the
cost of recording any corrective instruments shall be paid by the Seller. Documentary stamps to
Page 98
be affixed to the note secured by the pur-chase money mortgage, intangible tax on the
mortgage, and the cost of recording the deed and purchasing money mortgage shall be paid by
the Buyer.
16. INSURANCE: If insurance is to be prorated, the Seller shall on or before the closing date,
furnish to Buyer all insurance policies or copies thereof.
17. RISK OF LOSS: If the improvements are damaged by fire or casualty before delivery of the
deed and can be restored to substantially the same condition as now within a period of 60 days
thereafter, Seller shall so restore the improvements and the closing date and date of delivery of
possession hereinbefore provided shall be extended accordingly. If Seller fails to do so, the
Buyer shall have the option of (1) taking the property as is, together with insurance proceeds, if
any, or (2) cancelling the contract, and all deposits shall be forthwith returned to the Buyer and
all parties shall be released of any and all obligations and liability.
18. MAINTENANCE: Between the date of the contract and the date of closing, the property,
including lawn, shrubbery and pool, if any, shall be maintained by the Seller in the condition as it
existed as of the date of the contract, ordinary wear and tear excepted.
19. CLOSING DATE: This contract shall be closed and the deed and possession shall be
delivered on or before the ____ day of _____________________, ___________(year), unless
extended
by
other
provisions
of
this
contract.
20. TYPEWRITTEN OR HANDWRITTEN PROVISIONS: Typewritten or handwritten
provisions inserted in this form shall control all printed provisions in conflict therewith.
21. OTHER AGREEMENTS: No agreements or representations, unless incorporated in this
contract, shall be binding upon any of the parties.
22. RADON GAS DISCLOSURE: As required by law, (Landlord) (Seller) makes the following
disclosure: “Radon Gas” is a naturally occurring radioactive gas that, when it has accumulated
Page 99
in a building in sufficient quantities, may present health risks to persons who are exposed to it
over
time. Levels of radon that exceed federal and state guidelines have been found in buildings in
___________________________. Additional information regarding radon and radon testing
may be obtained from your county public health unit.
23. LEAD PAINT DISCLOSURE: “Every purchaser of any interest in residential real property on
which a residential dwelling was built prior to 1978 is notified that such property may present
exposure to lead from lead-based paint that may place young children at risk of developing lead
poisoning. Lead poisoning in young children may produce permanent neurological damage,
including learning disabilities, reduced intelligence quotient, behavioral problems, and impaired
memory. Lead poisoning also poses a particular risk to pregnant women. The seller of any
interest in residential real estate is required to provide the buyer with any information on leadbased paint hazards from risk assessments or inspection in the seller’s possession and notify
the buyer of any known lead-based paint hazards. A risk assessment or inspection for possible
lead-based paint hazards is recommended prior to purchase.”
24.SPECIAL CLAUSES:
COMMISSION TO BROKER: The Seller hereby recognizes
_____________________________________________________________________ as the
Broker in this transaction, and agrees to pay as commission __________________% of the
gross sales price, the sum of _________________________________________________
Dollars ($__________________) or one-half of the deposit in case same is forfeited by the
Buyer through failure to perform, as compensation for services rendered, provided same does
not exceed the full amount of the commission.
WITNESSED BY:
Page 100
____________________________________________________
Witness
Date
____________________________________________________
Buyer
Date
____________________________________________________
Seller
Date
NOTICE
Page 101
Assignment of Contract for Purchase of Real Estate
For value received, I, _______________________, of _______________________, as
assignor, hereby transfer and assign to __________________ of ___________________, as
assignee, his heirs, legal representatives, and assigns, all my rights and interest in that contract
between __________________ of ___________________________, seller, and assignor, as
purchaser, for the sale of the following described real estate, subject to the covenants,
conditions, and
payments therein contained:
[legal description]
I authorize and empower assignee, on his performance of all the above-mentioned covenants,
conditions, and payments, to demand and receive of seller the deed covenanted to be given in
the contract hereby assigned in the same manner and with the same effect as I could have
done had this assignment not been made.
Dated __________________________, _____________.
Signed ___________________________
ACCEPTANCE BY ASSIGNEE
I, _________________________, accept the above assignment of that contract dated. I agree
to perform all obligations to be performed by assignor under the contract, according to the terms
and conditions therein stated, and to indemnify assignor against any liability arising from the
performance or nonperformance of such obligations.
Dated _______________________, ___________.
Signed __________________________
Page 102
CONSENT BY SELLER
I, ____________________, the Seller named in the contract herein assigned, consent to the
assignment.
Dated ___________________, ___________________.
Signed
___________________________
NOTICE
Page 103
Affidavit and Memorandum of Agreement for Purchase and Sale
State of __________________________County of ______________________________
BEFORE ME, the undersigned authority, on this day personally appeared
_______________________________ who being first duly sworn, deposes and says that:
An agreement for the Purchase and Sale of the real property and further described in the
attached Exhibit "At" was entered into by and between the Affiant, as Buyer, and as Seller, on
the ______ day of ______________________________, 20______.
A copy of the agreement for purchase and sale of said real property may be obtained by
contacting
________________________________________________________________________
whose mailing address is___________________________________________________, and
whose telephone number is _____________________________________________.
Dated this ______ day of ______________________________, 20______.
FURTHER AFFIANT SAYETH NOT.
Signed, sealed and delivered in the presence of:
____________________________________________
WITNESS
_______________________________________
AFFIANT
Page 104
Sworn to and described before me this ______ day of ______________________________,
20______.
(Seal)
NOTARY PUBLIC
STATE OF ______________________________
My commission expires ____________________
This instrument was prepared by:
____________________________________
NOTICE
Page 105
Finder's Fee Agreement
I, ______________________________, AM IN AGREEMENT THAT FOR THE AMOUNT OF
$________________ I WILL BE FINDING AND ORCHESTRATING/NEGOTIATING A DEAL
FOR THE PROPERTY LOCATED AT: ___________________________________________
________________________________________________________________
FOR
THE
CLIENT ________________________________________________.
THIS FEE IS A FINDER'S/REFERAL FEE FOR LOCATING THE DEAL ON THE ABOVE
PROPERTY ADDRESS FOR THE ABOVE CLIENT. IN THE EVENT THAT THE PROPERTY
DOES NOT CLOSE ESCROW OR THE LOAN IS NOT APPROVED FOR THE ABOVE
CLIENT FOR THE ABOVE ADDRESS, THE ABOVE FINDER'S FEE WILL NOT BE
FURNISHED BY THE CLIENT.
IF THE CLIENT REFUSES AN APPROVED LOAN ON
WHATEVER PERSONAL GROUNDS, THE ABOVE FEE (100%) WILL BE FORFEITED BY
THE ABOVE CLIENT SINCE THE PROPERTY DEAL WOULD HAVE CLOSED ESCROW
BUT WAS INSTEAD REJECTED BY THE CLIENT. I, THE PROPERTY "FINDER," HAVE
________ DAYS TO FURNISH ALL OF THE REQUIRED FINANCIAL DOCUMENTS AND
PROPOSALS THE ABOVE CLIENT FOR THE ABOVE PROPERTY DEAL.
FINDER: ___________________________________________________
(SIGNATURE)
___________________________________________________
(PRINTED NAME)
CLIENT: ___________________________________________________
(SIGNATURE)
___________________________________________________
(PRINTED NAME)
TODAY’S DATE: _____________________________
Page 106

2010 How to Make a Fortune as a Bird-Dog Monica Main

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