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Real Estate Investors: Should You Become a Real Estate Agent?

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Female real estate agent holding house and keys

Do you have to have a real estate license to invest in real estate?

Nope.

For BiggerPockets, my name is Brandon, signing off.

OK, OK. Let's be serious. No, we don't think that every investor needs a real estate license—in fact, a license is overkill for most investors. That doesn't mean there aren't good reasons for some people to get their license. After all, hundreds of investors choose this path each year.

Some see a license as a way to learn the ropes before investing. Or they perceive being an agent as a path to a paycheck. Maybe you love the real estate industry, and want to pursue agenting as a full-time career. Yet ultimately, most realize that—while there can be advantages—a license is typically a long and expensive detour.

Related: Do You Need a Real Estate License to Flip Houses? Nope. Here’s Why

Perks of Being a Real Estate Agent and an Investor

Having a real estate license can come in handy for an investor. If buying and selling investment properties is your primary source of income, why would you want to limit your access and abilities? Truthfully, a real estate license can serve as an essential element of your real estate business—even though, again, it’s absolutely not necessary.

There are a few reasons that this is the case.

Direct access to your local MLS

First and foremost, having a license gives you access to the local multiple listing service (MLS). While there are certainly other methods of access, having your license means you won't rely on other agents, friends, or colleagues for access, and you can quickly find good deals. You can also post homes and rental properties without having to work with an agent.

A licensed real estate agent can get into almost any property that is listed for sale with a special key and lockbox. In other words, you don't have to wait for someone else to go see a property.

If the home is vacant, you can head over anytime, assuming the home has the special lockbox present. If the home is not vacant, you can set up a time to view it without having to fit into another agent’s schedule.

Make more money

Every time an investor sells a house through another agent, they spend about six percent of the sale price in agent commissions. And when they buy property, their agent also collects up to three percent for facilitating the transaction.

This means that on a typical purchase and sale of a property, an investor could access about six percent of the property’s purchase price in extra profit… if they didn’t have to give that money up to an agent. If you buy a property for $50,000 and sell it for $100,000, that’s $6,000 in additional profit—assuming your buyer didn’t have their own agent—you could have if you were your own agent on the purchase and sale of that deal! With just four deals per year, having your real estate license could earn you an extra $30,000.

Therefore, as a real estate agent, when you buy a property, you can represent yourself and use that commission toward your down payment, repairs—or a trip to Jamaica.

Controlling your own deals

Being your own agent allows full control over your real estate transactions—whether you’re searching for commercial property, short sales, or ideal fix-and-flips. You can submit offers to and negotiate directly with listing agents. You deal directly with the lenders, the appraisers, the inspectors, the closing attorneys, and all other involved parties. You control your marketing, sales, and showings.

Licensed agent-investors can stop worrying about minutiae. Will your agent drive to your property before every showing, turn on the lights, open the windows, and put out fresh cookies? Follow-up with everyone who has viewed your property to get feedback and recommendations? Send marketing materials to renters in the neighborhood who might be looking for a house to buy? Meet the appraisers at the property?

Enticing listing agents

Imagine you're the listing agent for a bank-owned foreclosure. And imagine one day you get a call from an agent whose client is interested in buying that property.

That agent says to you:

I'm going to submit an offer on this property. All you need to do is get the bank to accept the offer. After that, I will take care of letting my client into the house for inspections, I will take care of getting the utilities turned on for the inspections, I will complete all the additional paperwork, I will work with the title company on the title search, and I will work with the closing attorney on scheduling the closing.

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Then, on the day of closing, you don’t need to even show up. I will get your lockbox and your sign from the property, I will get your commission check from the closing attorney, and I will drive all of it over to your office immediately after the closing is finished to drop off to you. Oh, and by the way, I’ll also give you my half of the commission as a bonus, so you’ll earn twice as much money on this deal.

Do you think the listing agent would be interested in working with you? Of course they would. If you can provide these perks, agents are more likely to let you know when properties are getting ready to hit the market or have price drops. They might even clue you in regarding how much the sellers are willing to negotiate.

Closing speed

In a competitive real estate market, the early bird often gets the worm. As a real estate agent, you can be the first to know of real estate deals that are listed. I am not a real estate agent, but many of my investing friends are. And I’m often jealous of their incredible tools that make them faster than I can be.

Related: How to Be a Rockstar Real Estate Agent: 9 Tips for Standout Success

Why Real Estate Investors Shouldn’t Get Their License

Wow! That sounds pretty awesome, doesn’t it? But before you run out to get your license, let me explain a few of the downsides.

Actually getting your license

Well, for starters, becoming an agent is not as easy as signing a document. There’s a lot of extra work to have your own real estate license. First, you have to take an extensive class (depending on the state, the class could be up to 120 hours in length), and you must pass a difficult test, which may require long hours of studying. Plus, you’ll probably be required to earn about a dozen hours per year in ongoing education credits to retain your license.

And if you want to be a Realtor, not just a real estate agent, the National Association of Realtors requires additional coursework.

This takes away time from actually investing in real estate!

Working under a broker

In addition, once you have your license, you need to find a broker to work under, which involves additional fees and responsibilities. Do you want to essentially work as an employee—or have your own independent business? While the support of a brokerage can be a great help, it’s an additional burden for real estate investors.

Related: 7 Pros & Cons of Working Under a Broker as a Real Estate Agent (& How to Choose One!)

Paperwork

If you do a bunch of deals, you’ll end up doing a bunch of paperwork. This is the most annoying part of having your license. You’ll be responsible for writing your own offers and submitting forms to attorneys, agents, brokers, and the MLS.

That said, there are people who can handle most of the paperwork for you (for a fee), so even that’s not required if you really don’t want to or can’t do it. But again, part-time investors may find the paperwork requirements a bit daunting in terms of time commitment.

Disclosures

When you have your real estate license, you are held to a higher standard. You must disclose to buyers/sellers that you are a licensed agent, and you can’t “knowingly take advantage” of a buyer or seller. Some investors feel that having to make these disclosures and being held to this higher standard negatively impacts their business, and that is why they don’t want to get their license.

Cost… with no guaranteed money coming in

And we’re not just talking about exam or initial license fees. Once you become an agent, you’ll pay several thousand dollars in fees each year just to hold onto your license. Of course, if you’re making money as an agent, maybe this isn’t such a big deal.

All of this training and expense doesn’t even come with the guarantee of a paycheck. In fact, you could easily go three to six months before seeing a penny from a closing. Even if you market yourself as a seller’s agent or a buyer’s agent—hoping having more clients brings in more cash—you still likely won’t see cash for a while. Plus, the average real estate agent only barely makes minimum wage. To make any money, you have to hustle every day and invest in a variety of marketing efforts.

Distraction from real estate investment

And finally, the reason I’m not an agent: I want to focus on my investing. 

Look, I’m already busy enough, between raising a toddler, investing in real estate, trying to pretend I’m a surfer, and hosting the top real estate podcast on earth with over 60 million downloads. I don’t want to add one more possible distraction to my life.

When it comes to real estate, I’m going to let my agents do what they are really, really good at doing, and I’m going to focus on what I’m really good at doing. Plus, I don’t need the extra income.

If I had a job I hated and needed to replace that income quick, you know what, I’d probably become an agent. And I’d learn how to be a successful one. Maybe that’s you? But maybe not.

So should YOU get your license? Really, it’s a personal decision. I know that’s a lame answer, but the truth is there are plenty of examples of individuals who have had a license and found success and others who achieved greatness without it.

I know that was about as clear as mud. But hey, I tried.

What else can I tell you about being an agent-investor versus being strictly an investor?

Ask me in the comment section below. 

Brandon Turner is an active real estate investor, entrepreneur, writer, and co-host of the BiggerPockets Podcast. He is a nationally recognized leader in the real estate education space and has tau...
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    Willy Hutson
    Replied over 1 year ago
    Hey good advice, about real estate but if someone is needed some law advice on real estate or something else check https://amircanilaw.com
    Bradley D. from New York, NY
    Replied over 1 year ago
    Hi Brandon Good article! Aside from the cost of renewing a real estate agent license every few years, — you stated in your article it costs thousands of dollars each year to hold onto a real estate license as a real estate agent, can you please list those fees? Thank you
    Jeremy Hunter Real Estate Agent from Rock Hill, SC
    Replied over 1 year ago
    @bradley d. It would be you mls fees which may vary from state to state. Mandatory continuing education fees which your broker may pay for. E&O insurance if your brokerage doesnt cover it. And misc fees with having your license with some bigger national brand brokerages. Those are the majority of fees aside from your business fees aka marketing and such.
    Bradley D. from New York, NY
    Replied over 1 year ago
    Thank you Jeremy. I will scout out what those potential costs can be, to get a more exact yearly cost. Best,
    Iris Y Tang Realtor from Western MA
    Replied 2 months ago
    It really depends on your personality and your situation. I was an engineer for many years and I never thought that I would be a realtor. Then things changed, and I had to have a long commute to continue my engineering work. I decided to become a realtor / investor instead. Get your real estate sales licence is VERY easy, at least in MA. You take 40 hr online class and pass an exam, then you are licensed! What to do with this license in the next few months to a year is a bit challenging. I am a realtor in western MA and I have certifications in Real Estate Investment, e-PRO Digital Marketing, Pricing Strategies, Short Sales and Foreclosure; and designation in Green - Resource Efficient Homes. I'll be happy to share my learnings in these areas.
    Jeff J. from Santa Fe, New Mexico
    Replied 2 months ago
    I'm a real estate investor, I've developed a little land and own about 125 rentals. I've recently started leveraging my maintenance and management staff to manage third party properties. Where I live, and I imagine most places, you have to be a real estate agent (Qualified Broker, actually) to manage properties for other people. So for these reasons, I recently got mine. My observation is that RE agents are taught and trained to facilitate real estate transactions a way the mitigates liability for their clients and themselves. Successful RE investors are skilled at assessing the upside value of a project while knowing how to manage and mitigate the downside risk. RE Agents are in the business of risk avoidance, and that is not conducive to successful RE investing. Have a RE license can have some benefits, as noted in Brandon's article, but I wouldn't get one thinking it will give you some kind of extra insight on RE investing.
    Kortney Chambers
    Replied 2 months ago
    If you do decide to go the route of becoming a RE agent to buy and sell your own properties, what does finding a broker to work with you look like? Is it likely that one would do that knowing that you won’t be actively working for clients? How would you find a broker in that case?
    Dave G. Investor from Phoenix, Arizona
    Replied 2 months ago
    Brandon, You're right on with the article. I personally experienced this conundrum. When I was a young man in the early 90s, I wanted to get into real estate investing and decided to become an agent to learn the transaction side of things. It did afford me access, especially back then before the internet, to listing and offerings that I otherwise wouldn't have had. But being an agent did have expenses and it usually takes a long time to find clients and develop an income flow from sales. Further, the market condition I was trying to do this in were awful too - in the post-apocalyptic environment in Phoenix following the S&L crisis of the late 80s. Ultimately, I didn't really want to be a realtor nearly as much as an investor. So I moved on career-wise, and just invested. So my take away, which I think still applies today, is if you want to be an investor and realtor, then you need to really want to be a realtor independent of whether you want to be an investor. Otherwise, go do something else for a living while you do your real estate investing on the side. Good luck to all, Dave
    Daniel Borrero,Jr. from Brooklyn, NY
    Replied 2 months ago
    Wow.... I have been a Real Estate Investor since 1989. And I would highly recommend any Real Estate Investor to get their Real Estate License. Although the above benefits and disadvantages are 100% spot on, the rewards are very much worth the trouble. My partner and I have increased our net profits by at least 25% every year since we have had the license. Either through referrals to other investors, the commissions back to us when we buy off the MLS , the savings on Real Estate Commissions when we sell ( Not to mention the controlling of the deal). Again , I highly recommend getting the license.
    Matthew Bentley
    Replied 14 days ago
    I made an account just so I can comment! I think I might use this website often. Anyways, I'm 16 years old and very curious about getting into the real estate market. My plan right now is to take an apprenticeship when I turn 17, hopefully making money with a side job, but saving and learning as much as I can from a team of active investors and realtors. When I turn 18 I will buy my real estate license, and with that earn commission on sales to begin saving for my first big purchase. If I'm not suggested otherwise, my next move would be to purchase a hot property that I can hopefully either house hack or rent to people. I'm saying this to give anyone reading a general idea of who they're giving advice to, which by now I would hope you are typing something I can learn from. Thank you!