Real Estate Salesperson license for personal use?

Question

I'm contemplating selling my primary residence and buying a primary residence.  Both sell and buy side will be $1 million+ each transactions.  Area standard listing commission is around 2% and buyer agent commission is 3%.  I see this as a minimum of $50,000 worth of commissions and more likely closer to $75,000 worth of commissions that I could have by getting licensed.

The costs associated with getting a real estate salesperson license in my state is incredibly low in relationship to this ONE SINGLE life event of which there will surely be more in the future.

I also see a major pitfall with using a real estate agent on the buy side because then I am subject to their availability for when something hits the market rather than my own availability of pouncing on something quick.

I've researched out a few real estate brokerages that have a monthly fee to hang your license there and a flat fee per transaction.  For example, annually just to hang my license somewhere will be around $1000 and then per transaction is a flat $1000.

Each year I am out $1,000 to hang license with broker.Each year I am out $250 in education fees plus the low amount of hours to complete.Each transaction I am out $1,000.

This would mean that I would be ahead roughly $35,500 to $60,500 AFTER 10 YEARS of dormant activity ($1000 times 10.  $250 times 10.  $1000 times 2) minused off of the $50,000 to $75,000 worth of immediate commissions on my own personal sell side and buy side.

What am I missing?  Why wouldn't I go through the hoops to get licensed?

P.S.
I am aware of having to disclose "owner/agent". If you frequently do owner/agent deals do you run into issues with the counter party where they want a better deal because they know you are saving money on commission or due a commission (buy side)?

I am well versed in legal contracts and the series of events that take place in a RE transaction.

What am I missing?

Charles Mcdonald · Answer

I will certainly explore this option.  I'm trying to understand this a bit better, hence the reason for the thread, to weigh in my proposed method versus your proposed method.  The bottom line is that I'm looking to save money but also avoid the intermediary potential issues.  For example, on the buy side if I had my own licence and the perfect property popped up then I'll get in touch with the listing agent ASAP whereas my rebate driven agent may not.

Thank you for the reply.

Russell Brazil · Answer

Just because you have a license, doesnt actually mean you know what you are doing. I was just involved in a transaction where the other side ended up owing us $20k from a relatively simple mistake.

Charles Mcdonald · Answer

Any more comments?

Russell Brazil · Answer

They didnt disclose the private water and sewer utility charge. (These have various names throughout the country) This happens to me maybe 2x per year at this point, its always a very expensive mistake and always benefits me and/or my client when it happens.

Charles Mcdonald · Answer

Can you share details of this relatively simple mistake that cost $20k?

Charles Mcdonald · Answer

$50k for very little work but it isn't even the amount of work it is the competency and not having to go through an intermediary who may not posture properly, may not negotiate properly, etc.  I understand that maybe I won't posture properly or negotiate properly but if that happens then that is my fault and I should pay the price.  If an agent does that asking on my behalf then I pay the price.  One I can control and the other I can't.

There are a lot of brokerages that are low monthly minimum fee ($75 to $100) and then a flat fee per transaction.  It is in my original calculation of $1,000 to change license with broker and $1,000 per transaction regardless of size ($100k or $1m).  The local branch near me has over 100 agents listed on their website.  Its not a 60/40 split or any percentage of commission what-so-ever.  It is probably more DIY though where they provide basic tools, do basic review as the broker or something.  Not positive, maybe someone that has knowledge of this brokerage business model can chime in.

Jonathan Minerick · Answer

On the sell side, you can use a flat fee MLS service to list it ($100-$200), thereby avoiding the listing fees.

On the buy side, find an agent that will do a commission rebate or negotiate a discount directly with the seller agent if you are not represented (no commission to pay to a buyer agent).

Use transaction coordinators to help you with the paperwork (~$450, depending on the area).

Also consider what your time is worth and factor that into the cost of getting and keeping a license.

JD Martin · Answer

I would ask this question: why bother getting licensed and using an agency at all, given your apparent knowledge & skill level? The only thing I hear from your post is perhaps getting your property on the MLS. If you have that much knowledge, I don't see why you wouldn't just get the flat transaction place to list your property.

But personally, I think you are overestimating your abilities and your savings here. Let's say you sell for $1 million and you buy for $1 million and commissions are 5%. You're only realizing half of that on your side anyway, so at best you're saving $50k. Some of that goes back to whatever cut-rate broker lets you hang out your shingle. I don't think you're going to find the cheapo place you think you'll find, because what value is that to the broker? They have to be responsible for you for $500 or $1000?

It's a lot of trouble if you're only going to sell one or two houses. To me, your post sounds like you just want to be a "For Sale by Owner" guy, which is what you should probably do.

Charles Mcdonald · Answer

@Caleb Brown - I'm failing to see the value though. Even with discounted commission I would whether direct or indirect be paying $35,500 to $60,500 up and beyond what it costs me to get self-licensed after 10 years of not doing any transactions besides this upcoming sell and buy.

Negotiations on price:  An agent won't make up for the commission in this in my particular market.  I know the comps.

Negotiations on inspection:  I know a great inspector for my buy side and I'll get a good sense of things on the sell side.

Staging / Recommendations before listing:  Great friend is a designer and has already made recommendations.  There are several staging companies in the area that have great reviews.

I'm not trying to be confrontational -- I just don't see the value.  It may be there, but I don't see how an agent will bring $35k to $60k worth of value (really $50k to $75k since I don't have to deduct out the cost of licensing for 10 years if I use an agent on the sell and buy side).

Caleb Brown · Answer

If you aren't going to continue to use the license don't do it. You have to look beyond commissions. The right agent will bring value for buying or selling.

Real Estate Salesperson license for personal use?

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