An investor wants exclusivity for a flat $2,000 after 41 leads and 3 closings

Your $1,000 in costs is missing the truck. 900 miles at whatever the IRS rate is that year plus your actual gas and wear is real money, and you're pricing your labor at zero on 60 hours of calls. $5,750 minus $1,000 looks fine. $5,750 minus $1,600 across 60 plus hours of phone time and however many hours of driving looks like a wage, and not a great one. That doesn't kill the idea, it just means the fee per closing has to go up or the leads per closing has to come down.

Exclusivity for a flat that only pays on closing is him buying an option with your time. Six months locked to one buy box, and if he goes quiet for eight weeks because he's mid rehab on three houses you still can't send anything anywhere. If he wants exclusive, there has to be a floor. Monthly retainer, or a per-lead accepted fee, something that pays whether or not his money is free that week.

3 of 41 isn't your conversion rate, it's four different buy boxes averaged together. Break it out. How many leads went to each of the four, and how many closed per buyer. You said he passed on 9 and someone else closed one of those 9. So on his own numbers he's seen roughly a dozen of yours and bought one. That's 8 percent. If another buyer is at 1 in 6 on the same kind of lead, the exclusivity is a pay cut dressed as a raise. Until you have the leads sorted by who got them and what happened, you're negotiating on a number that doesn't describe anything.

I'd take flat over percentage every time and I say that as someone who got burned on percentage. The assignment fee is whatever the buyer says it is. You can't see the contract, you can't see the HUD, and if he decides to run it through a double close instead you'll get a number and a shrug. Your $2,750 was generous and you got it because he chose to tell you the truth. Flat is a number you can enforce.

Depends on price point too. Out where I look, assignments run four to eight grand, so 10 percent is $500 and the flat wins before you even get to the verification problem.

What are you actually doing when you get to the door? Because $2,000 per closing sounds like you're doing more than handing over an address, and if you're having a real conversation about what the seller would take, that's a different job with different rules.

Do you have anything in writing with any of the four right now, or is it all handshake? I've been reading about this for months and I still can't find a straight answer on what the one-page agreement between a bird dog and an investor even says.

The thing I got stuck on reading this is that you only found out about two of the closings because you asked. Is there any normal way to know? Or is everyone in this arrangement just trusting each other?

41 leads in five months from your own job sites is a lot more than I thought was possible for one person. Noting that.

Your value isn't the address, it's that you're a trades guy standing in front of the house. Anyone can buy a pre-foreclosure list. Almost nobody sending leads can tell an investor the roof has two layers, there's a soft spot at the back corner, and the panel is 60 amp. Price the condition note separately in your head and you'll see why $2,000 flat isn't crazy, and also why you shouldn't give one buyer all of it.

I pay bird dogs and I ask for exclusivity, so let me say why from my side. It isn't that I want to trap you. It's that I've spent money getting to a seller off someone's lead, gotten a verbal, then had the same house show up in another wholesaler's blast at a lower number two days later because my bird dog also sent it to him. Once that happens the seller thinks their house is an auction and the deal dies. That's the real fear. But the fix for that is per-address exclusivity for 30 days, not blanket exclusivity for six months on your entire output. He's asking for the wrong thing.

@flint that's a much cleaner version. Solder, counter with exactly that: every address you send him is his alone for 30 days, nobody else sees it, and after 30 days with no contract you're free. He gets the protection he actually needs and you keep three other buyers. If he says no to that, the six-month ask was never about seller confusion.

Flat fee, non-exclusive, per-address hold, and stop trying to optimize it further. You've made $5,750 in five months on something you're doing between jobs. The complicated version of this deal will eat more of your evenings than the extra $500 is worth.

Running your numbers straight: $5,750 gross, $1,000 stated costs, 60 hours of calls plus say 30 hours driving for 900 miles. That's $4,750 over 90 hours, about $53 an hour before the mileage cost you didn't count. Not bad for something learned on the job. But 90 hours produced 3 closings, so each closing costs you 30 hours. At $2,000 flat, exclusive, with a worse conversion because of his buy box, you'd need to hold 30 hours per closing to stay even and you almost certainly won't. @orchard's per-lead fee is the only thing in this thread that fixes the denominator.

One thing I'd add from the small multifamily side: tell all four of your buyers you'll also send two to four unit stuff. Most bird dogs only look at single family and I get almost nothing sent to me.

You're running a lead gen business with one product and four customers and no pricing tiers. I'd split it into a bare lead (address, owner, situation) and a full report (photos, condition, what I think the mechanicals need). Charge differently. Half my service revenue comes from the fact that I quote three levels of the same job and most people pick the middle.

Whatever you sign, read the non-circumvention language and the definition of "lead." I've seen these written so the fee only triggers if the buyer closes on "a property first introduced by" you, with no definition of introduced, which means an argument later about whether he already had it on a list. Attach a dated schedule of addresses to the agreement and update it. Also make sure the payment clause names a date, not an event you can't observe. Get it reviewed by an attorney in your state, this is one of the places where the answer changes by state.

I'd rather pay $3,000 for a lead I close than $500 each for six I don't. Which is an argument for your buyer, honestly. His flat looks low but his willingness to pay a real number per closing is worth more than four buyers who each pay $1,000.

@meridian that only works if solder can survive the months where nobody closes. Screening tenants taught me the same lesson, the person with the higher offer isn't better if the payment is uncertain.

Refusing an exclusive has never once cost me anything in five years of this service business. Every customer who asked for exclusivity was the one whose volume dropped six weeks later. Keep the four.

Are you passing vacant lots and odd-shaped parcels along, or only houses? Tax-delinquent land sits on those lists for years and almost nobody bird dogs it. Different buyer, less competition, smaller fees though.

Dumb question from someone still reading: the pre-foreclosure list at the county, is that the same as the notices in the legal paper, or a separate thing you have to pay for?

Managers know six months before anyone else which owners are done. If I were you I'd take one property manager to lunch a month and never buy a list again. Where the referral fee sits legally is a whole separate conversation and it varies by state, so ask before money moves.

@cobalt's tiering is the right shape. I'd go further and just write the report as a document with your name on it, same format every time, and let the price follow. You already do the hard part standing in the driveway.

One correction to the optimism baked into your pipeline. Filings being up 26 percent year over year, with starts up 20 and repossessions up 45, doesn't mean 26 percent more deals for you. A large share of pre-foreclosure files cure or get refinanced or sell conventionally, and the window where an investor is the best option for the owner is narrow. Track how many of your 41 came from the pre-foreclosure list versus your job sites. I'd bet the job sites converted better and cost you nothing.

Reading this, 90 hours over five months for $4,750 is a second job. I came into this wanting income without one, so I'm noting that this particular door isn't the one for me.

The exclusivity is the least interesting term on the table. Payment trigger, tail period, definition of the lead, and who bears the cost if he assigns the contract to a third party who closes are what decide whether you get paid. Get those four right and I'd sign with all four buyers on identical paper so you're not tracking different rules per person. Whether a finder's fee arrangement like this needs a license where you are is a state-by-state question and worth a paid hour with a real estate attorney before you paper any of it.