BiggerPockets

Should Real Estate Investors Get A Real Estate License?

There's a common misconception in real estate investing circles that real estate investors should not get their real estate licenses. Some argue that having a license puts you in a precarious position, especially when buying properties at a discount, flipping them, and then making a profit. Many novice investors have this concern. The reality is there are several advantages to obtaining a real estate license. In fact, every veteran real estate investor I know has a license because they understand the advantages. They also recognize there are no drawbacks if they do their deals ethically and legally.

As a licensed Realtor, you will gain access to potential deals via the Multiple Listing Service ("MLS"). When you have MLS access, you can run comps, learn about agents in your area, and perform due diligence. You can also research the market to familiarize yourself with the neighborhoods, types of homes, pricing, days on market, and other important factors. When you do your research using the MLS, you will quickly increase your market knowledge and comfort level in making buying and selling decisions.

Another advantage when you become licensed is that you will gain access to all of the contracts that local agents use when buying and selling property. These forms are usually updated annually, so having access to the most current contracts is essential. When you make offers on properties listed by an agent, you will need to use these forms.

Finally, there is nothing unethical or illegal about buying property at a discount from a motivated seller. While you may have to disclose to a seller in writing that you are licensed and are buying to flip and make a profit, this should hardly keep you from getting good deals signed. If it does hinder you, then you are working with the wrong kinds of sellers. A motivated seller does not care whether you are licensed or not. These sellers just want you to solve their problems. The only case in which you should be worried is if you intentionally mislead someone about the value of their home. This is something you should not do whether you have a license or not. If you think being un-licensed will allow you to avoid scrutiny, then you are mistaken.

Many unethical un-licensed real estate investors have been exposed in the media for their actions, many others have been sanctioned by their state's commerce department or attorney general. So don't buy into the misconception that being un-licensed gives you a free pass. If you mislead people, then you will be held accountable for your actions either way. You don't need to deceive people to do well in real estate investing anyway. Be upfront with sellers, disclose your intentions, and treat people fairly and you can still make a lot of money in this business.

Comments

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  James Vermillion — about 1 year ago

  Nice article Alex, and I agree 100%. As long as you know and follow the rules, the benefits are substantial.

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  David Wedemire — about 1 year ago

  Hi Alex. A well written article. There are benefits to being licenced as well as obligations. Your reputation is what matters most. Develop the wrong kind and eventually fewer people will deal with you. Treat everyone fairly and better deals will flow your way.

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  Tim Smith — 5 months ago

  not necessary. knowledge is, however. if you invest in multiple states or countries, you shouldn't be concerned with becoming licensed in each state. Is it necessary to become a licensed stock broker to purchase stocks and bonds?

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  Tim Smith — 5 months ago

  not necessary. knowledge is, however. if you invest in multiple states or countries, you shouldn't be concerned with becoming licensed in each state. Is it necessary to become a licensed stock broker to purchase stocks and bonds?

• 

  Tim Smith — 5 months ago

  not necessary. knowledge is, however. if you invest in multiple states or countries, you shouldn't be concerned with becoming licensed in each state. Is it necessary to become a licensed stock broker to purchase stocks and bonds?

• 

  Tim Smith — 5 months ago

  not necessary. knowledge is, however. if you invest in multiple states or countries, you shouldn't be concerned with becoming licensed in each state. Is it necessary to become a licensed stock broker to purchase stocks and bonds?

• 

  Tim Smith — 5 months ago

  not necessary. knowledge is, however. if you invest in multiple states or countries, you shouldn't be concerned with becoming licensed in each state. Is it necessary to become a licensed stock broker to purchase stocks and bonds?

• 

  Tim Smith — 5 months ago

  not necessary. knowledge is, however. if you invest in multiple states or countries, you shouldn't be concerned with becoming licensed in each state. Is it necessary to become a licensed stock broker to purchase stocks and bonds?