Real Estate Investing Basics

Will Becoming a Real Estate Agent Make You a Better Investor?

Expertise: Real Estate Investing Basics, Personal Development, Landlording & Rental Properties, Real Estate News & Commentary, Business Management, Flipping Houses, Real Estate Deal Analysis & Advice, Personal Finance, Real Estate Marketing
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In my opinion, the answer is simple: yes. I don’t really see any reason why becoming a real estate agent could harm you or your real estate endeavors. If I could turn back time, I actually wouldn’t mind going through the whole course, sitting in for the exam, and getting my license. A few things stand out for me where I can remember making mistakes and losing quite a bit of money, which might not have happened if I’d had my license.

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Legal Issues & Compliance

The first way that becoming a real estate agent could help you in your investing business would be in the legals and compliance. There are a lot of things associated with putting together a contract, constructing a purchase agreement, or even selling a property that you definitely learn as a real estate agent. Unfortunately, you do need to have those book smarts or you’re going to be pretty raggedy like I was—writing bad purchase agreements and contracts. And once you put something on paper, you can’t really go back on it.

Related: Why You Should Stop Looking for an “Investor-Friendly” Real Estate Agent

As far as compliance, you have to know what you are saying and how you are saying it. In Australia, we are very friendly and say a lot of things that may be received in a different way here in the states. We like to hug people and all kinds of stuff that doesn’t sit right here sometimes. So as a real estate agent, you can definitely learn important aspects of the real estate culture, especially the legal and compliance needed to do a successful job.

Logistics

There are also logistical things that you would pick up immediately as a real estate agent—things like how to prospect for buyers, how to prospect for sellers, how to brand yourself, how to do marketing, how to do listing presentations, and how to come up with a description of a property. You’ll also learn better how to understand what a property is worth, how to do an appraisal or comparative market analysis, and how to go on to the MLS. I definitely think that those things are worth their weight in gold.

Related: What You Should Know About Registered Agents for Your Out-of-State LLC

Real Estate Team

Last but not least, the most important thing is the team. What I mean by that is when you become a real estate agent, you are going to have to put your license under a broker or brokerage. Hopefully, you will have access to that broker because they will likely guide and mentor you. They will be someone who has been in the business for five, 10, or 15 years. So the wealth of knowledge and level of experience they have will be extremely valuable. They have gone through market cycles; experienced disgruntled buyers and sellers; and worked with financial institutions, lenders, appraisers, and building inspectors. So just imagine what they have to offer to you. Then you’re probably going to be working with other real estate agents who also have a certain level of experience. It’s kind of a match made in heaven. I say that because I’m a big believer in your network equalling your net worth. As an agent, you have people who can pick you up and take you with them. As a real estate investor, you are kind of on your own. I moved here by myself—I didn’t have much money, I didn’t know anyone. I had to meet people and it was pretty tough.

To summarize, I definitely think getting a real estate license and becoming a real estate agent can help you become a better real estate investor.

Do you agree? Disagree?

I’d love to hear your thoughts. If you have any comments, please comment below.

Engelo Rumora, a.k.a."the Real Estate Dingo," quit school at the age of 14 and played professional soccer at the age of 18. From there, he began to invest in real estate. He now owns real estate al...
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    Thomas Phelan
    Replied almost 2 years ago
    I agree that becoming licensed might educate you regarding the mechanics of buying and selling real estate but there is a tremendous trade-off. A licensed real estate Agent or Realtor is held to a much higher and stricter degree of disclosure. Tick one client off and you may lose your license. Also, consider this, there 45,000,000 Individual Retirement Accounts (IRAs) in America with Wall Street dominating 95% of the seven Trillion invested dollars. Real estate claims less than 4% of those trillions. If real estate Agents and Realtors were such great investors or teachers of investing in real estate why such a paucity of IRA dollars invested in real estate. I once asked an ex NAR President this question and all I got was a blank stare. Most real estate Agents and Realtors don’t own a lick of investment property and don’t know how to represent it. If it were my choice I would learn the academics and not become licensed and then find a savvy real estate Agent or Realtor who understands among others things; 1031 Exchanging and how an IRA can buy real estate.
    Engelo Rumora Specialist from Toledo, OH
    Replied almost 2 years ago
    Hi Thomas, Thanks for your comment. It’s a shame that most agents aren’t investors but rather just “sales professionals”. The marketing is shifting at a rapid pace with tech truly taking over the real estate industry. Real estate agents need to be prepared and start focusing on multiple streams of income through the real estate industry. Just my opinion Thanks again and have a great day
    Amy Iverson from Bellflower, California
    Replied almost 2 years ago
    I have to disagree with this article. Real estate classes only teach you the terminology used in real estate. They might show you an example of a contract but they really don’t teach you how to actually practice selling real estate. Taking the classes, getting the license, and signing up under a broker is not that hard. (I did it when I was 19) But that’s as far as it goes. Brokers don’t mentor you on how to get up and running unless you are lucky enough to find a really good one or it’s someone you already know. Even then, the way they “teach” you is to sit you down with a phone book and have you cold call hundreds of people, or maybe they’ll offer classes once a week for encouragement. Also, the above comment is true. If you are investing and are a real estate agent, you are held to a much higher standard and have to disclose that information.
    Engelo Rumora Specialist from Toledo, OH
    Replied almost 2 years ago
    Thanks Amy, It’s very important finding and working with the right people. I know of many real estate agents that are even better real estate investors. The same holds true for brokers. Work with only those that aren’t dinosaurs and that understand how quickly the industry is changing. Much success
    Greg Jensen from Enid, Oklahoma
    Replied almost 2 years ago
    I am a Real Estate Broker/Agent I started real estate about 13 years ago, during that time I have purchased and sold over 100 properties, I currently have 70 income producing properties. picking the right broker/minter is a huge reason for my success, and as the comments above there is pros and cons. In my opinion the pros out way the cons. First being the commission that comes along with the purchase and sale of your properties, second the properties come to you, once you start buying word gets out and the sellers start coming to you, I always give them options this is what I can give you as an investor and this is what you may be able to get if we list it, 9 times out of 10 they just want to dump it and be done. I also found a broker that allowed me to manage other peoples property which has allowed me to have support staff and a maintenance crew. I have since been able to purchase the brokerage and am now the one mentoring others. Amy is right getting your license is not the answer its what you do with it once you get it that counts.
    Engelo Rumora Specialist from Toledo, OH
    Replied almost 2 years ago
    Thanks Greg, As I mentioned in a comment above. It’s about finding the right people and it seems like you have done just that. Congratulations on your success. Have a great day
    John Silva from New Bedford, MA
    Replied almost 2 years ago
    I agree 100%. Especially being part of a well know reputable broker. The knowledge, guidance, and using the brokers marketing materials i.e. mailings and internet is priceless. Don’t forget when you buy and sell the property you will receive a commission!! Because your a agent. That is thousands back in your pocket.
    Engelo Rumora Specialist from Toledo, OH
    Replied almost 2 years ago
    Thanks John, I own a brokerage and every property we buy (100+ a year) we get the buyers agent commission. It equates to additional an $100,000+ in income for us every year. Not bad 🙂 Much success
    Katie Rogers from Santa Barbara, California
    Replied almost 2 years ago
    I don’t understand why people nonchalantly toss off “become a real estate agent.” maybe it’s different in other states, but in my state, you can pass the licensing exam but you cannot be an agent unless you can find a broker to “sponsor” you. You have to work for that broker, not yourself. You might be able to find a broker who lets you rent a desk in his office for a couple thousand per month. that seems a poor use of money just to be able to call yourself an agent. Besides that broker will cut you loose if all you do is pay the desk rent, but do not otherwise enrich the broker
    Engelo Rumora Specialist from Toledo, OH
    Replied almost 2 years ago
    Thanks Katie, The real estate brokerage world is changing at a rapid base. 100% commission brokers that are tech orientated are taking over. No desk fees and no junk fees, etc… Check them out. I wish you much success
    Renay Reese Property Manager from San Antonio Texas
    Replied almost 2 years ago
    Great info I second and third everything you say! good stuff!
    Engelo Rumora Specialist from Toledo, OH
    Replied almost 2 years ago
    Thanks Renay, Much success
    Nathan G. Real Estate Broker from Cody, WY
    Replied almost 2 years ago
    Nice article, Engelo. Being a licensed REALTOR definitely helps understand things better as an investor. More importantly, a REALTOR can find deals before they hit the market. I currently own 19 units and all of them were purchased off-market by sellers that came to me specifically because I am an investor and a REALTOR. If I were just a REALTOR, they could have picked anyone else. If I were just an investor, they wouldn’t have given me the time of day.
    Engelo Rumora Specialist from Toledo, OH
    Replied almost 2 years ago
    Hi Nathan, Thanks for your comment and congratulations. This is so true: “If I were just a REALTOR, they could have picked anyone else. If I were just an investor, they wouldn’t have given me the time of day.” Great way to look at it. Much success
    Abe Schweky Flipper/Rehabber from Lakewood, NJ
    Replied over 1 year ago
    I am first starting out in the real estate world, and I am considering going into fix and flips. I dont know much about anything. I was thinking about becoming an agent. My question is, the fix and flip world seems to be a full time job. Will becoming an agent just add to much work that will make it impossible to manage everything all at once? Seems to be there is lots of paperwork…?
    Andrew Hodgson Real Estate Broker from Olympia, WA
    Replied over 1 year ago
    I think becoming a licensed real estate agent would be hugely beneficial to new investors trying to get into wholesaling, in particular. The fact that agents are held to a higher standard of ethics, disclosure, legality, etc with their license on the line would actually be hugely beneficial! Can you imagine the vast improvement in knowledge, skill, behavior, and reputation that wholesalers would see if they got the proper training and became licensed agents? I couldn’t agree more that built-in access to mentors at your firm, correctly drafted contract forms, marketing systems, the MLS, and a network of local professionals at your fingertips are major benefits. Credibility with sellers is also vastly improved when you can say “I am a broker at XYZ Realty,” instead of just, “Nice to meet you, I want to buy your house,” or explaining what wholesaling is every time 🙂 I know becoming licensed is not required to wholesale, but I personally believe it to be a big advantage.
    David Bruce Flipper/Rehabber from Kailua Kona, Hawaii
    Replied 8 months ago
    I am an investor in Hawaii. Median price in our area is 650k. I have done 4 flips and a new build and starting an Airbnb portfolio. However I am thinking of thinking to become an agent to add a stream of income. I have missed a couple of opportunities as people in my community know I am involved in Real Eatate. I am trying to weigh the pros and cons of adding that to my biz. Will it hurt with the added disclosures of being a gent. Currently I am getting all my deals on MLS. So not as big of a deal if I am doing direct mail marketing. But 2-3 sales could easily bring 30-40k and also could save on sell side and be with an agency on listings. Currently I have been flatlisting homes and saving that 3%. A dilemma to decide on for sure. Thoughts advice? Reply
    Sam Tecun New to Real Estate from Hudson, MA
    Replied about 2 months ago
    Hi David, I'm just curious on how you have access to the MLS if you're not an agent?
    Erik Stenbakken Investor from Nortnern Colorado
    Replied about 2 months ago
    I'm an REI and in real estate license classes online right now. I see value in studying the content at the very least. Maybe I'll get the license -- or not. You can get a bare bones class for under $300 and learn all the legal material that WILL make a difference if you don't understand it and guess wrong. Or take a "guru" class for $10,000 and learn many of the same things. Not saying the online classes will make you a rockstar investor. Nor saying that guru classes don't have value. Frankly, the classwork for license has zero intent to make you a better REI. But… knowing things like knowing what an easement in gross is -- and what that could mean to an investment, that's valuable. Knowing what the obligations of my agent are to me -- valuable. Example: neither the seller agent nor the buyer agent has any legal obligation to verify the dimensions of a property. Right. They're not required to check that. Only YOU the buyer are. How many properties did I buy before I knew that? Too many. If you're not going to be a frequently buying and selling agent, maybe the full license is not necessary. But the information is inexpensive and could be valuable. In fact, I can't think of a REI mistake that ever cost less than a $300 class.
    Brian S.
    Replied about 2 months ago
    I guess the question of *will* it make you a better investor depends on what your goals are. Learning the basics of real estate investment isn't terribly hard, and I've met a few successful investors that are certainly knowledgeable enough to where they could easily be an agent if they wanted to. The problem there (as they see it) is that they don't want to have to deal with the other stuff that comes with being an agent (e.g., endless paperwork, multiple systems to manage, continuing education, fees, etc.). They'd just rather pay someone else to do it, and I totally understand why that makes sense for them. Speaking for myself though, I've been a licensed agent for two years now, and I've learned a TON just by showing properties to investors. As a result, it gave me a lot more confidence going into my first flip. As a bonus, come time to sell I can do it all myself which saves a lot of money. I suppose there's other ways one can get that experience, but being an agent has absolutely paid dividends for me as an investor. So my thought is that being an agent can only help.
    George Baltakian Real Estate Agent from Los Angeles
    Replied about 2 months ago
    Being an agent can definitely help with real estate investing. It allows you to move quickly. As an agent, you are involved with real estate contracts, market analysis, dealmaking, negotiation, calling/networking, etc on a daily basis. Regarding accountability, I think it's responsible to be thorough with your disclosures, anyways. There are many types of brokers and their policies and arrangements with agents can vary. Some of their policies may advise against your other real estate business activities, so be aware of that when choosing a broker. My broker has fantastic coaching, and even offers courses about working with flippers and buy/hold investors.