5 Real Reasons You Should Get a Real Estate License

Forget politics and sports. Try mentioning the words “real estate license” and you’ll divide a room full of real estate investors in two.

Although you don’t necessarily need a real estate license to be a successful investor, you can enjoy some advantages of having one. After all, investing is not an easy game as you’re competing with investors looking to snap up the same properties and get the same results as you. Hence, the need to embrace any opportunities that come your way.

If you’re still undecided, here are five important reasons why you should get a real estate license:

1. You’ll Get Access to MLS

One of the biggest benefits of obtaining a license is that you’ll have access to the Multiple Listing Service (MLS) and a comprehensive source of comparable sales.

With a license, you’ll have the independence in borrowing access from agents, which is usually difficult. Also, rather than waiting for your realtor to inform you of the latest deals, you’ll be the first to know when a new listing shows up on the MLS, giving you an upper hand in selecting properties in preferable locations.

Additionally, access to the MLS allows you to run custom search queries and analyze real estate historical data for a thorough understanding of listings. You can also determine specific details, such as the type of property and its buyers.

2. You’ll Earn More Money

Each time investors sell a property through an agent they spend up to 6% of the sale price on agency commissions. It often goes amiss that the agent picks up another 3% for processing the transaction. Therefore, investors are essentially losing up to 9% in profits from the complete sale or purchase price.

However, having a license can free you from such substantial agency fees as you’re technically your own agent. So, if you buy a property for $50,000 and then sell it for $100,000, you could make an additional $4,500 in profit thanks to the power of your agent-evading license. That amounts to an additional $18,000 if you manage to get four deals in a calendar year.

3. You’ll Gain Business Experience

Even if you only make one or two deals in a calendar year and receive a comparatively lesser income from those, the consolation is that you’ll receive a wealth of experience if you ever decide to set up your own real estate agency in the future.

Once you understand how the real estate business works, you’ll gain important insight on property transactions, such as contracts and detailed property information, all of which could save you a lot of time and money in the long run.

4. You’ll Have Full Control over Deals

Having a license allows you to create offers and negotiate on your own terms without the need for an agent. You’ll get to deal directly with lenders, property inspectors, attorneys, and anyone else involved in the process of purchasing a property—on both the buying and selling side.

Additionally, when it comes to showcasing a property’s finer details, agents will unlikely put in the same effort as you; they won’t necessarily drive long distances for each property showing, follow up with potential buyers, show the best view of a property, or lay out a delicious spread.

You can also send your own marketing material to potential buyers in your local area, an endeavor that your agent will probably not fulfill. And when you have total control over your real estate affairs, you can follow up on deals, and ask for recommendations and feedback.

5. You’ll Make New Contacts

You can meet a lot of people at open houses, local networking events and in your own office. Your license can somewhat act as a form of ID allowing you to make internal contacts with banks and gain some inside information on bank-owned properties.

Investing is similar to running your own business: the more people you network with, the better the chance of closing more deals.

Conclusion

Although owning a license provides a number of advantages, you should remember that it’s not that easy to obtain and keep one.

Firstly, the process of getting a license can be a difficult task. You have to part with a few hundred dollars and then put in approximately 100 hours of studying, including coursework and exams. Once you get your license, you’ll need to work under a broker, which may require you to pay more fees.

Secondly, there’s a lot of paperwork involved. The more deals you do, the more “homework” you’ll have. Work includes, but not limited to:

• Writing your own offers
• Paperwork for attorneys
• Corresponding with other agents and brokers
• MLS paperwork

Despite all these, the biggest selling point of getting a license far outweighs its disadvantages. Taking on a lot of responsibilities for a potentially lucrative investment can be a very liberating way of making money.

And while a license may not be necessary for every investor, purchasing properties using it may just change the way you carry out any future investments, favorably.