To Be or Not to Be: A Realtor That is

Michael Noto

Real Estate Agent · Southington, CT · Member since 2008 · 5k+ posts · 3k+ votes

11y

There is absolutely no downside to getting your license unless you are going to have trouble coming up with the upfront & yearly costs associated with becoming licensed.

OP

Real Estate Agent · Dayton, OH · Member since 2015 · 86 posts · 36 votes

11y

The up front costs are of little concern as it is a worth while self investment and there are few things better to invest in.

As for saving the costs at closing, that is a great reason to get it. But I have seen a lot of arguments for "high paying activities" IE. pay a Realtor to sell the houses while you go look for more deals because the deals make the real money.

Amy Brocious

Butler, PA · Member since 2015 · 29 posts · 7 votes

11y

Please excuse my ignorance of this topic ... I had started to research the possibility of getting my RE License ... but wasn't sure about the pros/cons. From my understanding, once you get through the process, in order to use the benefits, you need to work for a Real Estate Agency (work under a broker in order to do deals)? I was hoping to use it for access, but wasn't necessarily looking to use it as a new full time job. Am I correct in this?

OP

Real Estate Agent · Dayton, OH · Member since 2015 · 86 posts · 36 votes

11y

I believe you just need a sponsor as far as I understand.

James Wise

Real Estate Broker · Cleveland Dayton Cincinnati Toledo Columbus & Akron, OH · Member since 2013 · 30k+ posts · 20k+ votes

11y

You need to work under a Broker in Ohio.

This does not mean all brokers will require you to work full time.

Best thing to do is speak with a few brokers and see what they are open too.

OP

Real Estate Agent · Dayton, OH · Member since 2015 · 86 posts · 36 votes

11y

I am definitely open to being an agent full time. Real estate is what I want to do and so I figured this was a good way in.

Zac P.

Rental Property Investor · Lexington, KY · Member since 2012 · 115 posts · 64 votes

11y

Originally posted by @Roger Smart:

I am definitely open to being an agent full time. Real estate is what I want to do and so I figured this was a good way in.

Roger,

I struggled with the same decision for years... I would recommend for you to just do it! It's totally worth it. MLS access is a great tool, being able to quickly get into houses/write contracts is convenient and you make/save a ton of $$$ on transactions. I don't even advertise myself as being a Realtor, but people know that I'm "in the game" and just ask me to represent them on their deals. I make very good side $$$ occasionally representing friends, family and other investors buying properties. Yes, Realtors are held to a higher ethical standard, but we should all hold ourselves to these high standards... It does NOT hold you back as an investor in anyway unless you are purposely looking to lie and deceive your clients/costumers. Being able to tell a potential client that you are a Realtor gives you more credibility as well. Find a good brokerage company to work in and you are golden! For myself, not having my license would hold me back. Good luck! :)

2 Reply

OP

Real Estate Agent · Dayton, OH · Member since 2015 · 86 posts · 36 votes

11y

Thanks @Zac P.

Good advice! I appreciate that. Out of everything I've seen about real estate, the most prominent advice everyone keeps giving is "Just do it" and that is what I am doing. Partly our of desperation but partly because it's want I have been interested in for the last year. And I know a year doesn't seem like a long time. But for me a year is quite a chunk of my life being so young.

I can sit for hours and play video games. But I can sit for hours and read real estate books, browse bigger pockets and read blogs, fiddle around on zillow, and come up with crazy schemes to text my friends. Next thing I know I've been up for hours.

This is something I am going to pursue. And I'm not simply wading into the shallow up. I'm up to the high dive.

Darrin CareyPro Member

Lender · Dayton, OH · Member since 2008 · 1k+ posts · 705 votes

11y

@Roger Smart

First, I am NOT an agent. I did the same analysis several years ago, and decided a license did not improve my business model (yes, I gave up some potential commissions). Depending on your business model it may be an excellent tool for you.

Being an agent gives you the legal right to represent a third party in a transaction, and receive a commission for it.

There are costs upfront to get the license, then an annual cost to maintain it.

You must disclose that you are an Agent (not a big deal)

Ethics are the same whether you are licensed or not.

The number one reason I hear for investors wanting their license is for MLS access. (I'm now married to a broker, but that may be a bit extreme to get MLS access) Second is for the commissions whether personal or otherwise.

The classes will teach you how to comply with the law as an agent, but do not teach you how to invest, or how to build a good business.

As @James Wise said, you certainly need to interview some brokers. Each one is a little different in what they will allow their agents to do. Some things I've encountered from other investor/agents that affect their investing activity.

All personal transactions MUST run through the brokerage
Wholesaling not be allowed
Bird dog may or may not be allowed, but being licensed it is legal.
Minimum annual/monthly fees
Minimum Floor time
Property Management allowed or not
Personal assistant activities restricted
Mandatory meeting or training
Some brokers have excellent training programs for building a business as agent. Some have none at all
Some brokers will provide support for websites, marketing, etc. Some leave it all up to the agent.

I'm in no way saying these are not allowed legally. It's perfectly legal for an agent to take a referral (bird dog) fee or for anyone to assign a contract for a property. However, some brokers will not allow it in their business model.

Keep us posted as you go through your decision making process, and decide what works for you.

@Darrin Carey @Roger Smart

Jay HinrichsBusiness Member

Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes

11y

A few of your bullet points are passé in todays brokerage world... like all things RE you get what you put into it.. Now I don't know about Ohio but on the west coast you can find fee brokers that will just charge you a minimum transaction fee or very low monthly fee and your free to do any business that is legal.

and it really depends on what your goals are.. Many top agents make quite a bit of annual commissions and live a pretty neat lifestyle and take no risk in owning or selling their own properties.. It depends totally on your median home prices in your area if you want to rely solely on commissions for income..

But most top realtors I know in most markets do a lot of investing and of course have that nice base income.. As you become more experienced in RE it becomes much easier.. you will get referrals and business will just come to you.

the hard part is starting and not quitting... 50 to 60% of agents quit in 2 years.. As they never get enough steam going to make a living.

However I do think you can't underestimate the value of access to the MLS.. especially now with other sites getting kicked out of the MLS data bases.

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Paul Ewing

Investor · Boyd, TX · Member since 2014 · 688 posts · 467 votes

11y

I was in the process of getting my license in Texas, but decided for a couple of reasons to put it on hold. First was time to study everything just vanished this winter as I had a lot of other stuff going on including trying to get two new houses I had purchased ready to rent and settled. Then I started to look at what I would gain from the license for my current phase of investing and the main things are access to the MLS, entry to properties when I want, the ability to submit my own offers, and 1.5% off from commissions.

My current targets are usually unoccupied so I can do a drive by and look in the windows and get an idea if it is worth going inside. My agent is easy to work with and I have a nice portal that gets me most of the info I want and daily emails of new or changed listings meeting my criteria and I can always go to the portal to see if anything has updated in the afternoon instead of waiting for the morning emails. She will usually be able to get me in a house in a few hours if I call and say it is worth looking at. Sometimes I will call her to arrange appointments for a few as soon as I see them come up and then drive by and call her to cancel if they aren't worth her coming out. I am buying sub $50K properties so the 1.5% commission I would get as an agent isn't worth the expense of all the required association dues and such.

The course material was worth the $179 I spent on the online class and I feel I have a much better idea of the process and laws now. When I semi-retiree from my corporate job in two years I may look into retaking the classes and getting my license then since I might have time to play the retail side of things. But then again I may have too much going on with my own investments to worry with sales at that point too.

Jeff CopelandBusiness Member

Real Estate Broker · Tampa Bay/St Petersburg, FL · Member since 2015 · 1k+ posts · 2k+ votes

11y

@Darrin Carey touched on a great point that I wanted to make: Getting your Real Estate License will not necessarily make you a better/smarter/faster/cheaper investor - the two skill sets are completely different.

As an agent, you'll learn the concept of agency (representing the interests of another party in a transaction) and the associated laws in your state, and you'll learn the inner workings of the "closed ecosystem" that is the MLS. These are useful and important to real estate agents and brokers, but they are not core skills needed to be a successful real estate investor.

So, yes - a real estate license is nice to have; It can save you money on commissions, give you an alternative income stream (as an agent), and give you access to the MLS. But make sure you're doing it for these reasons...because it will not really teach you anything about real estate investing.

If you're closing on a lot of MLS properties and reselling them through the MLS (i.e. flipping REOs and retailing them), the savings on commission alone could be in the thousands. Same if you are doing deals on really high end properties.

But if you're working off-market leads and wholesaling, or using some other creative business model, getting your license probably isn't going to help at all.

Getting a RE license certainly isn't the first thing I'd do if my goal was to get started as a wholesaler/flipper.

If you're going to buy & hold, at some point it may help (for the reasons noted above), but there's so much else to learn that is directly related to your core business, I'd recommend starting there and considering licensure later in your career, when it will pay immediate dividends.

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OP

Real Estate Agent · Dayton, OH · Member since 2015 · 86 posts · 36 votes

11y

I like that all the responses have varying views on when and why/why not to get licensed.

I think if I already had a good business model, then it would not be necessary as I'd be working with a realtor already. But I do not have any sort of business set up yet and I have an urge to be that realtor that area investors trust to close their deals.

My current job I work as salary manager for Applebee's pulling about 60 hours a week. No matter how hard or how much I work I see the same pay every two weeks. I just turned 23 so I have plenty of time to make mistakes and recover, as long as I don't give up. So instead of working all these crazy hours in the restaurant business, I'm going to get licensed and work all these crazy hours for myself (or a broker, depends how you look at it) and get hands on in the real estate field. I understand that it will not teach me the entire story of real estate investing, but I can market myself to investors, go to local clubs and meetings, and learn over time the tricks of the trade. All while networking, generating a pretty good commission based income if I work hard enough, and having fun!

So here is my plan (since I read on here that it is good to have one and stick with it):

1. Take classes and Get Licensed
2. Find a sponsor, I have a meeting with Irongate on tuesday
3. Join local REIA's and attend meetings to network
4. Sell houses and save for a down payment for my own home
5. Buy a duplex (seems to be with the way to go)

Any other suggestions are great. Keep them coming in.

Thanks,

Rod