I'm new to Real Estate investing and have a very basic (i.e. dumb) question.
My aim is to secure my license in Georgia and get access to the professional MLS so I can begin hunting and securing properties independently. If I understand the licensing requirements correctly, I have to be tied to a Real Estate Broker to get my license. Endorsed by them or affiliated with them.
I haven't made a connection with a local Agency yet. I didn't know why the RE Broker would want to endorse me or work with me if all I'm doing is hunting for my own investment opportunities. How do they get benefit from that relationship too?
@Eric Stieler almost every state has some sort of a requirement for new agents to work with a managing or sponsoring broker. This is a good thing, since most new agents have no idea what they are doing. The schooling to become an agent is 100% focused on compliance with federal and state laws, and doesn't really teach you anything about how real estate is actually sold.
New brokerages are actually very excited about taking on new agents for the most part. Brokerages make their money from you through commission splits, desk fees and transaction fees. You would be an asset to a brokerage in most cases, as the easiest deals always happen in the first year when family and friends come to you to sell their houses.
As an investor, the selection of a brokerage is critical. I decided to go with a smaller brokerage that gives me tons of flexibility here in the Chicaro area. I do most of my work with other investors here in the Berwyn, Riverside and Brookfield area near where I live, but my office is actually in Chicago. There are a few trainings offered, but I never go to them, as I am busy doing business!
As an investor, you also need to find a brokerage that is ok with you doing mostly your own investor business. Look for 100% commission shops or smaller brokerages for the most part.
Best of luck!
Real estate licensing laws vary state to state. Here in NY state, you must pass an exam, start off as a licensed agent, where you have to hang your license with a broker. Then, after two years, you can move up to broker where there is another exam.
There is an alternate route. Attorneys can apply for and obtain brokers license without exams. There is an equivalent experience route, and a co-worker of mine became a licensed property manager even though normally licensed brokers can be property managers. She spend a number of years employed as a PM by a large real estate company, and got her license that way.
Here in NYS, there are many ways to work with brokers at the stage where you hang your license with a broker. I took the course, passed, got the paperwork to hang my license with a broker. I never got around to it, became a real estate investor first. But the course and exam gave me good knowledge of real estate laws. Besides taking the course for the licensing exam, I took other real estate courses courses where they offer a certificate of real estate.
Brokers used to spit commissions 50/50 with agents. My wife worked for a short while as an agent this way. The problem is you have to drive customers around to do showings for rentals and sales for free, on your dime.
These days, you can pay a desk fee, do your own deals, and don't bother with doing showings if you don't want to. But desk fees run several hundred a month. With this if you manage to rent or sell anything, the cut could be 90/10 or better.
I partnered with an agent to find deals. He was fired later on because he didn't cut his broker in on deals. He figured deals he found on his own doesn't concern his broker, but his broker apparently disagreed. But the law is on the broker]s side.
@John Warren -- thank you for the lightning fast response. I'm realizing I left out a key detail: I have a job, I like my job and it runs me at 50+ hours a week.
I'm looking to Real Estate Investing as a wealth building, retirement enabling second income stream with plenty of help from local team members that will do the heavy lifting after I've selected & financed the opportunities.
I'm glad to work with smaller firms, commission-only shops. I'll need to be clear that I'm not looking to be an agent for their buyers or sellers -- just on my own investment opportunities. As I think through that discussion, it seems like a relationship where I get a license, I get access to valuable information and they *don't* get an employee that's looking to help them further their business aims. Seems like an arrangement they'd reject. Am I overthinking or missing something?
@Frank Chin , that is great background. I like the idea of paying a (reasonable) desk fee as remuneration for the MLS access and sponsorship. I'd even be open to paying a (reasonable) percentage of the deal with the expectation that I'd represent myself, do all the work and bear the risk.
Not sure if that'd be appealing to an agency and whether their definition of (reasonable) would match mine....
Hey, you can also make some side-money by making referrals to the other agents in your office (and the broker/firm benefits from this too). I often make $1000/hr or more by making referrals like this.
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