As an Investor, Should I Get My Real Estate License?
There are a lot of people that are considering getting started flipping houses that visit the site. One of the questions that comes up often is whether or not they should get their real estate license. I've always just said that it wasn't necessary but didn't go into much detail as to why I didn't think it was necessary.
First, have you joined our private FlippingJunkie facebook group? Come network with us!
The Biggest Benefit of Becoming a Licensed Real Estate Agent
The biggest benefit that I can see with becoming a licensed real estate agent is that you can get access to the MLS (Multiple Listing Service). Having access to the most comprehensive and accurate source of comparable sales (comps) and being able to find deals is the biggest reason I would recommend becoming an agent.
The reason why I don't normally recommend it is because you can more easily develop a relationship with an agent in order to get access to the MLS. Maybe you can't get direct access yourself, but if they can pull comps for you and send you info on properties to make offers on, you are still benefiting without having to become an agent. They are not supposed to let non-agents use the MLS and if you can't get the access, you might want to consider becoming an agent or having somebody you know become an agent.
Pros of Getting Your Real Estate License as an Investor• Access to the MLS
You can run your own comps. You won't need to bug somebody every time you get a lead that justifies analysis. You won't have to wait for those comps and will be able to look at all of the pictures for each of the comps. If the search criteria used for the comps was insufficient to get enough valid comps, you will have to contact them again to run another search. Of course, if you are able to get access from an agent, you can do all of these things yourself.
• Set up your own appointments and get lockbox codes
As an agent, you can set up appointments to see listed properties and get the lockbox codes to gain entry.• Submit your own offers and get part of the commission
You can write up and submit your own offers. You won't have to wait for it to be done for you. You also get a commission from the purchase (as the buyer's agent) and from the sale of a house (seller's agent). This could allow you to buy some deals that are a little too tight for other investors. It's really not that much though (usually 3%) so don't go thinking you will be able to buy a lot that others aren't buying.• Find listed deals
You can search the MLS for deals yourself. You can make quick changes to your criteria to filter and find what you are looking for.• You can have more control over your offers and deals
You can check on your offers yourself and negotiate for yourself. You won't have to send everything through your Realtor.
Of course, most of these benefits really only relate to making offers and buying houses from the MLS, not directly from motivated sellers.
Cons of Getting Your Real Estate License as an Investor• You will have to take the licensing course
Want to go back to school? Here's your chance. I'm sure it's not too bad.• You will have to pass the exam
Yes, you have to pass an exam. They won't just assume that you know what you need to know.• You will have to pay MLS dues
You're gonna have to pay for the privilege of having access to the MLS. It's not cheap either.• You might have to deal with continuing education requirements
You will probably have to continually be learning to stay abreast of new laws and changes in Real Estate that affect agents.• You will need to 'hang' your license with a Broker
It's not enough to just get your license. Once you have it, you will need to find a broker to hang it with. The fee structures and set ups are different from broker to broker so I will not go into all of that. Some research on your part would be prudent.• You will also be required to disclose that you are a Realtor
This is a big one, especially if you are buying directly from homeowners instead of from banks. As a licensed real estate agent you will have a fiduciary responsibility to the homeowners you are buying from. This is because you are considered a professional as a real estate agent, which can be seen as having an unfair advantage over the people you are buying from. Yes, this means that you have more liability if things don't work out. You will need to disclose that you are a Realtor during your initial contact with a seller.
So there you have it! The pros and cons of being a licensed real estate agent and a real estate investor at the same time.
If you were to ask me whether you should get your license or not, I will probably still tell you to just spend your time developing a relationship with an agent. Ask other investors and/or call some real estate agent offices and ask for an agent that works with residential real estate investors.
Do you have an opinion on the matter? I'd like to hear from you. Please let me know what pros and cons that you have considered in getting your real estate license or not. You can do so in the comments below.