All Topics / Help Needed! / bird-dogging legalities

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  • Profile photo of scotty3scotty3
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    @scotty3
    Join Date: 2003
    Post Count: 54

    Hi all,
    I have been reading lots of postings about people doing or thinking about bird-dogging and have great concerns about this.

    Are you all aware it is illegal unless you hold a current real estate buyers agent’s licence or better?

    If you are caught without a license there are hefty penalties, so don’t just jump blindly onto a ‘good idea’ without proper due diligence.

    I licenced myself earlier this year as a result of doing such research. Licences are required in Australia (yes, all states). I don’t know about overseas.

    Check the Dept of Fair Trading website link:

    http://www.fairtrading.nsw.gov.au/realestaterenting/agentsmanagers/rules_buyersagent.html

    and the Property, Stock and Business Agents Act 2002.

    If it still interests you, the Office of Fair Trading websites list institutions that offer licensing courses.

    Cheers,
    Scotty3

    Profile photo of inezinez
    Member
    @inez
    Join Date: 2004
    Post Count: 32

    Thanks scotty3 for your advice. Welcome sevenup( from a newby myself) This is a great site.
    Inez

    Profile photo of Alistair PerryAlistair Perry
    Participant
    @aperry
    Join Date: 2004
    Post Count: 891

    The fair trading act states that you can’t act as an agent. You can act as a bird dog, as long as what you are doing does not fit the criteria given for this definition.

    You just need to be careful with how you act. An example is architects, some of whom generate work by taking potential projects to their clients, in return for the design work.

    Profile photo of scotty3scotty3
    Member
    @scotty3
    Join Date: 2003
    Post Count: 54
    Originally posted by APerry:

    The fair trading act states that you can’t act as an agent. You can act as a bird dog, as long as what you are doing does not fit the criteria given for this definition.

    You just need to be careful with how you act. An example is architects, some of whom generate work by taking potential projects to their clients, in return for the design work.

    Can you explain to me how someone can find a property, present it to another buyer and accept a monetary reward for doing so with out it falling under the definition of an ‘agent’ and/or a ‘business for reward’?

    In your case of the architect, he/she receives no monetary reward for the introduction of the property, only for the design service. This reward would fall under the regulations of the architectural industry.

    Bird-dogging is relating to flicking properties for money. People do this deliberately and soley for the monetary reward. It is therefore
    a) a business
    b) the act of an ‘agent’ as defined in the Act.

    If you want to pretend it is something other than this, let it be on your conscience and all I can say is ‘Good luck’ if you get caught, because I don’t think the authorities will view it as you do.

    My intention with this post is to get people who might be innocently considering bird-dogging without a license to think twice before doing so.

    I also, as a legitimate and reputable buyers agent, don’t want the industry tarnished with ‘mavericks’ (and believe me, I’ve seen some!) who are accountable to no-one.

    Cheers,
    scotty3

    Profile photo of Alistair PerryAlistair Perry
    Participant
    @aperry
    Join Date: 2004
    Post Count: 891

    Scotty,

    I aggree with you that you need to be very careful, and “bird dogging” in the form that is usually accepted is certainly illegal. However, it is not illegal to introduce people, and it is not illegal to wreap benefits from doing so, as do many architects in the example given.

    I run a town planning consultancy and we work with a number of architects who do this, we also actively help our clients network, because it is good for business. This is very similar to bird dogging.

    The laws do not allow an unlicensed person to spruik property, there is no law against introducing people who might be able to do business together, as long as that is all you are doing.

    Definately be careful, and definately contact consumer affairs in your state and or seek legal advice, but all I am saying is that it is wrong to say that you cannot benefit from this type of activity without being a realestate agent.

    Profile photo of scotty3scotty3
    Member
    @scotty3
    Join Date: 2003
    Post Count: 54

    We are in agreement, APerry.

    Your architects are doing something similar, but different to straight bird-dogging. In fact, I wouldn’t call what you do ‘bird-dogging’. More power to you – there’s nothing wrong with networking!
    [biggrin]
    scotty3

    Profile photo of Alistair PerryAlistair Perry
    Participant
    @aperry
    Join Date: 2004
    Post Count: 891

    Scotty,

    I didn’t think you’d disagree. But there have been a lot of people come onto these boards interested in Bird Dogging after having read Steve’s books, and I thought it was important to point out that there is not a blanket ban on getting involved in the property industry in this way, just restrictions. Certainly you are correct in warning caution.

    Profile photo of MiniMogulMiniMogul
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    @minimogul
    Join Date: 2002
    Post Count: 1,414

    I am ‘bird dogging’ (definition: finding deals for investors – the ‘how’ is very different from bird dog to bird dog) in NZ and it’s legal. (Specifically, we inspect, negotiate and sign up conditional offers and then assign the contract while still in the due diligence phase.)

    We do this ‘on spec’ and then offer the deal to a client list who are (hopefully) ready to purchase. On payment of an ‘option fee’ for want of a better word (actually, that’s a good description) we assign the deal to a client and then all documents go to the client’s lawyer. If the client doesn’t have a lawyer, there are a couple of good ones we recommend who are used to dealing with our clients (mostly Australian.)
    We supply a good deal of due diligence to clients upfront and then after assigning the deal we assist the client to find out the rest (book building inspections, valuers) and also help them appoint a rental manager – basically watch and monitor the deal through to settlement – and sometimes beyond. Some clients need a lot of help and some need little, and we assist as much as we can or as is needed with contacts on the ground etc. (All of our deals are in places where we are investing ourselves, and so we don’t for example bird-dog off the plan apartments in Auckland because none of us buy that sort of property.)

    We sought the advice of many lawyers along the way and have a contract clause (in the sale and purchase agreement) which discloses the way we do business and that we plan to assign – that the vendor signs off on from the outset, a private assignment document with the client, and sometimes a third ‘tri-partite deed of nomination’ if required by the the vendor’s solicitor.

    As far as I know the way we do it is similar to yet unique to other bird-dogs, and we basically evolved it along the way. Different lawyers gave the wording a little tweak here and there. But the assignment document between us and the client works in concert with the clause between us and the vendor, so it’s all above board.

    The more deals you bird dog the more you will find out what is acceptable to you as a business, your clients for their security, and what you can get over the line with agents and vendors. The more deals we do the easier this becomes as we become known for good business practices. Touch wood, but I can’t remember the last time a deal of ours fell over on finance or builders’!!

    So I guess you could say that there are quite a few ‘research and development’ costs involved in sorting out your ‘bird dogging’ method.

    I used to bird dog using a different method earlier. The client would give me their criteria and I would find the deals, and present them to the client. The client would have a think about it but often once they decided ‘yes’ the deals were sold. So I wasn’t ‘getting paid’ even though I had done the work. So the second phase in my bird-dogging career was to tie up the contract. I had to put the price up a lot because now I was incurring legal fees, plus if the client didn’t take it, perhaps there was another client who would. A third way to do it which we still do in certain circumstances is to organise the client to sign the deal up direct in their own name at a pre-negotiated price. All of these methods depend on your relationships with agents and so on, and all of them have an element of risk.

    but there is no getting around the fact that you will have to find a lawyer who understands what you are trying to do, confirms that it’s legal, helps you brainstorm, troubleshoot and tweak the method and so on.

    A really slamming business partner such as I am blessed and fortunate to have sure helps too.

    Look forward to meeting some of you at tomorrow’s Steve-in-Sydney seminar!

    cheers-
    Mini

    joy to the world

    Profile photo of FFCommFFComm
    Member
    @ffcomm
    Join Date: 2004
    Post Count: 627

    Selling an option on a property would be hard to define as bird dogging.

    Rgds.
    Lucifer_au

    Profile photo of MiniMogulMiniMogul
    Participant
    @minimogul
    Join Date: 2002
    Post Count: 1,414

    Hi Lucifer,

    “Selling an option on a property would be hard to define as bird dogging.”

    for the purposes of our services, it is very much bird-dogging – i.e. we find deals for investors with a lot of the DD already done (not builder’s or valuation usually, although there are some that offer that but they charge about $2000-3000 more than we do. Hey that’s an expensive valuation and builder’s.)

    However for other practical reasons, such as being able to make sure the deal is ‘ours’ before offering it to clients, not to mention that it’s a legal and bona-fide tried and trusted method,
    we do it the contract/’option fee’ way.

    cheers-
    Mini

    joy to the world

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