Hey. Sherman Ragland, The RealInvestor®.

And I'm coming in today with a really controversial topic. I'm talking about Bird Dogging. And you know, in an earlier video I talked about wholesaling and I said in that video, wholesaling and Bird Dogging are not the same thing and they're not. But a lot of people confuse this and that's why I thought I clear this up with a next edition of 10 Minute Real Estate.

So, Sherman Ragland, RealInvestor®. And again, as always, if you've got questions about real estate, real estate investing please go to askarealinvestor.com and submit your questions. You can also see questions that people have been submitting. This is where we get the information to do these 10 minutes segments. This is where we get the questions that we do for our podcast. This is where we get our questions to go out and do our videos, because we wanna make sure that we're answering your questions and helping you to become a better investor and to become a real investor.

So the topic today is Bird Dogging. And why is it that some people say it's illegal and some people say that it isn't. And the best way for me to illustrate this is to tell you two quick stories. And trust me. It's gonna take a whole lot less than 10 minutes.

So story number one.

I'm a long time real estate investor. Many of you guys know this. I've been real estate investing since about 2001. Full-time real estate investor since about 2001. I had a 20 plus million dollar business that went tube side in one day and I started doing wholesaling and then rehabbing and then investing.

And that is my real investor journey. And everybody has a real estate or real investor journey. So I started off as a wholesaler. I've never really Bird Dogged. However, I can tell you, I am a Bird Dog. And I'll explain that in a second. 

So quick story. I've been investing in the Washington DC area. And that means, that means DC proper, Washington DC, Maryland, suburban Maryland, and of course, northern Virginia. So three different jurisdictions, three different set of regulations, three different attitudes about Bird Dogging. That's story number one.

Story number two.

Washington DC. And this is probably the best way to illustrate Bird Dogging and why you may not want to be a Bird Dog. So Washington DC, there was a very famous lady, she's since been deceased, but she was very activist in the community. She was very pro many social activist activities. She was an art collector. She was a confidant to many people and she was just a general all around great woman. Her name was Peggy Cooper-Cafritz.

She also happened at one point in time been chairman of the school board. And she was very connected amongst the DC elite and DC politicians. And because she was connected, she was approached by a very famous real estate investor, uh, real estate investor / developer. You may have read his book, but I'm not gonna go into the details. And he approached her and he said, Hey, Peggy I own this building in Washington DC. And I would like to get your help in getting the Washington DC government, the DC city council, to agree to lease the building from me on a long term lease. I will pay you if you help me. So they entered into an agreement and Peggy did what she was supposed to do.

And she was supposed to get a million dollar Bird Dog fee. Like most people are like, Bird Dog fee of a million dollars? 

Stay tuned and I'll tell you exactly what that entailed.

So she went ahead. She did her part. The DC government did in fact sign up. They did take a long term lease in that building. And she went back to that real estate investor / developer and said, hey, I did my part, pay me my million dollars. And that real estate developer investors said what are you talking about? And she said, the million dollars. We have a signed agreement, right? And he says, oh, let me see the signed agreement. And so she's like, come on, stop playing around with man. Pay me my fee. Of course, I'm paraphrasing.

And he took a look at the agreement and he says, Nope, not gonna pay you. And she's like, well, if you don't pay me, I'm going to sue you. And he's like, sue me. And she did. And when they went before the judge, my understanding, the judge said, well, you have a signed agreement, Ms. Cooper-Cafritz, however, according to DC law, you cannot do what you've asked him to do.

In other words, you can't get this developer to pay you a million dollar finder's fee unless you have a real estate license. So can you produce your real estate license? She's like real estate license? I don't have a real estate license.

Not only do I not have a real estate license, he knows. The guy who I signed an agreement with knows I don't have a real estate license. He just hired me because I know people. And so the judge looked at her and he said I'm sorry ma'am but under DC law, in order for you to get paid that fee you have to have a license. And because you don't have a license your contract is to do an illegal act. In other words, it's illegal for you to collect a fee for finding a real estate buyer. 

In this case, a real estate tenant, without having a real estate license. So he said, I'm, I'm sorry but I'm gonna find the contract null and void. And he doesn't owe you anything. Now here's the deal. The real estate investor / developer knew this . He knew this because this happens, quite frankly all the time, especially to new investors or people who think they're investors but they're Bird Dogs.

By the way, Bird Dogging is not investing. It doesn't have any of the three elements we talked about in the prior video. It is a way to get into the game. But as I said before, real estate Bird Dogging is much more closely aligned with being a real estate agent or real estate broker.

Because the fact that when you are a Bird Dog you have no skin in the game. You are not buying the property. You're not selling the property. You are just putting two parties together and collecting a fee. And guess what? That sounds a whole lot like real estate brokerage. And it is. And real estate brokerage, real estate licensing, is very much like any other licensing.

Whether you're talking about being a nurse, being a doctor, being an attorney. It's regulated at the state level. There is no such thing as a federal real estate license. All licensing for a real estate agency, or being a real estate agent or a broker, happens at the state level, or in the case of Washington DC, the District of Columbia level.

And that's why it's such a confusing topic. Because in some states, it is 100% illegal to be a Bird Dog, unless of course you have a license. While in other states, they don't really care.

So let me finish the story and then sort of get to the meat and potatoes of today's 10 minute Real Estate. So Peggy, of course, Ms. Cooper-Cafritz, being influential enough to get the DC government to agree to go into the guy's building, was also influential enough with that same DC government to get them to change the law retroactively. You heard what I said. Retroactively.

In other words, change it for something that had already been done. That's almost never happens but it happened in Washington DC. And so in Washington DC, most real estate agents most real estate brokers, know about the Peggy Cooper-Cafritz law. So what did the law say?

Without getting into all the details, basically what it said was that if you do a limited number of transactions where you're providing advisory services, no you do not have to have a real estate license. And by having the DC government write that law and make it retroactive, Peggy Cooper-Cafritz was able to collect her million dollar fee. Woo, yay Peggy. I love those stories where the underdog wins. 

But most people don't have that power and most states, quite frankly, would never do that. But it did happen in DC.

So what's the lesson of the story? Well, in Washington DC, yes. You can Bird Dog without having a license and get paid a fee. In Maryland, it is illegal for you to Bird Dog without having your real estate license. Now, the law doesn't say it's illegal to be a Bird Dog. And this is again, a very confusing thing. What the law says is in Maryland we have something called Comar.

And I'm not a lawyer but I did go to law school and I did get an AA in contract law. And I also got an AA in constitutional law. So I kind of know what I'm talking about. But this is not legal advice.

So in Maryland, we have something called the Code of Maryland Regulations, or Comar. And what Comar does is it first defines what's a real estate broker. What's a real estate agent. And then it goes on to say that if you do any of these things, and it's a long laundry list. If you do any of these things in Maryland you must have a real estate license. And if you do not have a real estate license and you're doing any of these things, you're breaking law.

So that that's how they get you, right? And so in Maryland, it's basically says if you're providing real estate advisory for a fee, you're providing real estate services for a fee, if you're putting a buyer and a seller together you're putting a landlord and a tenant together, you must have a real estate license.

So if you do those things like what Bird Dogs do and you don't have a license then you're breaking the law in Maryland. But Maryland is kind of like a slap you on the risk kind of state.

And then Virginia, the, the Commonwealth of Virginia, is very serious about it. They say if you do Bird Dogging without a real estate license and you get caught, on the third time you get caught, you're gonna get hit with a $3,000 fine. I think it's 3,000. Could be 5,000.

And if you get caught more than three times, you get hit with what's called a Class 6 felony. Now class 6 felony, you're like, what's that? Is that like double secret probation? No, it's a little more serious than that. It is a felony. But it doesn't carry any jail time with it. But because it is a felony, if you are a registered voter in Maryland, in Virginia, excuse me. You lose your right to vote. If you have a security clearance, you lose your right to have security clearance.

Why do you have three different jurisdictions, Maryland DC, Virginia, that have three very different attitudes? Because the laws are written by local legislators. And those local legislators are influenced by local industry groups.

And it's very clear that in Virginia, the Virginia real estate industry, or the Virginia Real Estate Association of Realtors, is incredibly powerful. Powerful enough to write a law that says if you Bird Dog in Virginia, and you get caught three times, you're gonna get hit with a class six felony. 

Now here's my point in all this. You want to check with your local jurisdictions and find out what the local laws are where you are. But the bottom line is this. Bird Dogging in some places is illegal. Bird Dogging in many places is illegal but it's only gonna get slapped with a slapped on the wrist kinda like going, you know, 60 miles an hour and 55 zone. I'm not telling you to go 60 miles an hour and 55 zone but kind of the same penalties.

And in some jurisdictions, Bird Dogging is okay. But Bird Dogging is basically providing a real estate agency or a real estate broker services without a license. And if you have a real estate license and you're providing those services you're generally in the clear in that jurisdiction, in that state, that commonwealth, that District of Columbia, that district, that US territory. And if you don't have a license, you may very well be breaking the law. It's up to you to figure that out.

But real estate Bird Dogging is not investing. It's providing a service and getting paid a fee. My strong recommendation, know your local laws because you could very well enter into a contract with somebody like Peggy did. But because you're breaking the law, your contract is unenforceable. And because it's unenforceable, you may never get paid.

Despite the fact that you help somebody do what you agreed to do. And there's a whole lot of real estate investors, experienced real estate investors out there who understand this way better than you do who are more than happy to enter into a written contract, or written agreement, to have you do certain things and then wind up not paying you.

And that, to me, is the most serious downside of being a Bird Dog. If, in fact, the laws in your jurisdiction don't allow you to do without a license, and you don't have a license, you may very well work and not get paid. And why in the world would you ever wanna do that? Now wholesaling is totally different.

Watch my video on wholesaling or I got series of videos on wholesaling to understand better how to become a wholesaler. But in my opinion, it's about the same level of work. But the amount of money that you make is like 10 times as much.

You're much better off spending your time, energy, learning how to become a wholesaler versus becoming a Bird Dog. Sherman Ragland, a RealInvestor®. I hope you like this.

Hit like and share if you did. I'll post all the links below to all the cases I talked about and all of the news stories I talked about in this particular episode. And I hope to see you soon in another episode of 10 Minute Real Estate. Sherman Ragland, The RealInvestor®. Bye.