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The Pros and Cons of Wholesaling With a Real Estate License

Marcus Maloney
3 min read
The Pros and Cons of Wholesaling With a Real Estate License

Lets discuss the pros and cons of wholesaling with and without a license.

It’s safe to say this question has been circulating around the BiggerPockets community for years: Should I get my license? Some people comment “Sure,” and others say “Heck no.” As a wholesaler, I’ve been on both sides of this debate. When I started, I did not have a license. While I quickly saw the benefit of having it, I’ve also seen some of the limitations it brings.

As we begin, I will lay the ground work. I’ll discuss a pro and follow up with a con. This way, you’ll clearly see the advantages and disadvantages side by side.

Another question I see all the time is, Is wholesaling illegal? I’m sure you’ve seen this question tossed around as well. We can minimize the complexity of this question by answering: It doesn’t matter if you have a license.

Pros and Cons of Wholesaling As A Real Estate Agent

Pro #1

You don’t have to worry about doing something illegal. This a good thing to know. For those of you who want to wholesale and can’t acquire a license based on your history, finances, or whatever, then it’s safe to say you’re taking a gamble.

Con #1

The cost of acquiring a license. It will cost you close to (if not more than) $1,000 to get your license. By the time you pay for classes, the test, and membership fees, you could be starting in the red. So for those on a limited budget (as most newbies are) you have to stack some coins before starting.

Related: Answered: Should You Get Your Real Estate License?

Pro #2

I refer to the ethics of doing real estate transactions. We know there are some greedy and grimy people in this industry, and that’s fine (not really) as long as they don’t cross the line. If you’re licensed, you have to do everything according to the department of real estate standards. That includes submitting to a criminal background check. In some cases, real estate investors already have a bad name, and we want to make sure those operating in the space are not doing business illegally.

Con #2

If you did something incriminating 30 years ago, should you still be judged for something you did when you were 19? Our society is quick to say we believe in rehabilitation, but do we honestly believe that? I’m definitely not saying anyone and everyone should have an opportunity to handle a transaction, but there needs to be a little more discretion used in the decision-making process.

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Pro #3

When you’re at the table with the seller, encouraging them to sign with you instead of the guy that’s not licensed, you may have the upper hand. You can make the argument that you are licensed and have to do everything according to the department of real estate standards. This gives you credibility.

Con #3

To that point, if you do acquire the deal, you have to pay your broker. Yes, this makes your assignment fee smaller. Less money in your pocket.

Pro #4

Proximity. Agents like to do business with other agents. (What I refer to as proximity.) If agents in your brokerage know you have investors or properties, they will look to you for the deals. You will not have to do too much work to find either. Unless your in a market like today’s — definitely a sellers market.

Related: What Exactly is Real Estate Wholesaling (& What Does a Wholesaler Do Every Day)?

Con #4

As a non-licensed wholesaler, you don’t have to use that 15-page book as a contract. You can create (or have an attorney create) something short and sweet. The contract that agents have to use provides a lot of protection for the seller and the buyer, but it’s so dang long that a lot of sellers get intimidated. You can lose a deal because the seller will say, “I need to review all of this before signing.” While they’re reviewing it, a non-licensed wholesaler can offer the same price on a one-page contract and the deal is done. While your book is sitting on the nightstand.

Conclusion

I could go on and on about the pros and cons of both options, but you have to decide whether you’re vested in this for the long haul or just looking to get in and get out. In my opinion, if you’re making real estate investing a career, get your license. It will be a benefit for you in the end.

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I’m sure you have some other awesome pros and cons for wholesaling with and without a license, right?

Share them below so we can get an open debate going!

Note By BiggerPockets: These are opinions written by the author and do not necessarily represent the opinions of BiggerPockets.