Accountant · MN · Member since 2008 · 142 posts · 25 votes
I was wondering if people get there real esate license just for the sake of doing there own deals? How long does it take? What are the costs invovled? Can you represent yourself and get paid a commission (or save on a commission) when you do?
You will have annual costs and continuing education requirements. You increase your liability. You will tend to put off some sellers as you have to tell them you are an agent almost immediately when speaking with them. You will have house rules that may further restrict your ability to do certain types of deals. You will not be the top of other agents lists of people to call when they have a hot deal (they expect you to want a cut where an investor will let them keep the full commission).
Being an agent is fine if you want to be an agent, you like brokering deals and other wise help buyers and sellers. Getting a license to say a bit on some deals is not the best reason.
I definitely do not recommend people becoming a licensed Realtor to save commission costs on their own investments.
Not only do you have to deal with expensive dues (I paid a minimum of $2,000/year on fees and dues alone), but every real estate transaction is a legal mine-field & lawsuit waiting to happen. You have to spend a lot of time, learning and training, and also most of the large brokerages will not let you broker your own deal. They have E&O insurance issues and if you screw up on your own RE transaction, you'll be paying for legal fees and mistakes out of your own pocket. It CAN be a potential nightmare.
You also have to disclose your Realtor status with every transaction you deal with. An in a lot of cases, you don't have as much freedom as if you were a regular investor/person who doesn't have a license.
If you are ONLY going to use it to save commissions, don't bother. But it also allows you to make money in the non-investment sector of real estate, so it does open up other possible income streams for you if you want to use it that way.
If you are ONLY going to use it to save commissions, don't bother.
I agree with boylank! You don't need a license to save on commissions. Most investors in my area don't like to deal with realtors. I've come across some advertisements that clearly say 'no realtors'. If you have to disclose that you're a realtor upfront then you may lose out on some deals. I think most investors, at least wholesalers anyway, think of realtors as an expense to their bottom line.
Like it was said earlier, if you want to be an agent then be an agent. You may learn a lot from the courses you'll have to take. Having a license won't necessarily make you a better investor.
Thanks for all the great insight on this message and the entire website.
As I already have a day job (accounting) and judging from your reponses I do not think a real estate liscense is the way to go.
Do you guys use realtors when you buy and/or sell investments properties? Most sellers around here have realtors so when buying a property, why not have a realtor, you pay nothing extra.
I agree with most people that are speaking up if it is just to save on commisions then don't do it but I STRONGLY suggest that you go and take the real estate classes you will not have to automatically become a realtor or licensed real estate agent but it will help you understand the market further and understand things such as title, appraisal, and maybe a little bit about loans even (although it is severly outdated from what I have seen) knowledge is always usefull. So check it out and if you are an accountant and could use your real estate license to help clients find houses and make a significant other source of income then I say go for it, to cut a little commisions I would pass.
Another bonus though is having access to the MLS and that can be a HUGE benefit as usually the smokin deals get ate up right away I check the MLS atleast every 30 minutes in my county and surrounding counties. The deals that the most money are made on are either bought up the day they hit the market or ones that have sat for a long time and the reo depts just take any offer that they can get on them. Just my limited experience.
In my opinion (an investor that just got their liciense), it is worth all the trouble and dues to be able to get the listings in real time, and not just from realtor.com and other similar sites that don't have all the information and run on 2 - 3 day lag.
Also, keep in mind that just because you are an agent doesn't mean you have to broker your own deals. You could always "refer yourself out" and get 25-30% of the buyer commission as well. Considering some large brokers like Keller Williams are on a 70/30 split, that is still a good chunk of change that allows you to replace all the appliances in the new investment!
I actually heard a very good argument for this a few days ago though in my mind it would apply mostly to REO's. As an agent youd see the listing before anyone else, so on the rare occasion an an actual deal came up on the MLS youd see it before anyone else. Additionally you already have the lockbox code and can just go see it for yourself as opposed to having to wait for someone to let you in. You have the same forms the listing agent would so you get in, get your no contingency offer in to the listing agent ASAP, likely before anyone else even knows it's on the market. You let the listing agent have both the listing and buying agents cut, further increasing the odds of having your offer accepted, and making that agent more likely to remember you next time they have a decent REO as they're getting paid double when you close, and that you did it so quick and hassle free last time. Not sure how cool that would be with your broker though. I'm not a realtor so I dont know if theres some responsibilty there. But sounds promising...in theory at least.
Anyway that along with just having access to the MLS to do your own very accurate comps easily, made a decent argument for this.
I'm not sure I'm completely sold on it, but another thought anyway.
That's pretty much the reason I got my license. Before getting it I would see houses come up all the time that I wanted to see - not even necessarily that I was interested in buying, but I wanted to see LOTS of houses as comparisons for instance - but it was a hassle to make an appt with an agent to see all of them. And I'd feel guilty if I wanted to see houses I knew I probably wasn't interested in because agents don't like to waste their time. And the commission saved could possibly at times be the difference in getting an offer accepted.
But, I probably still would not have gotten my license just for that reason. What made me decide to get my license was the above reasons plus it provided other possible income because it opened up the normal residential market. I can now also provide typical realtor services too. And when working deals for other investors I can learn a lot about what to do and what not to do by their examples as I see their situations play out.