Should I get my license?

Question

Hello! I have a few questions for y’all.

1. Is it worth it to get your real estate license if your real estate strategy is to house flip?

2. Are there any drawbacks to getting your license that hinder any part of real estate investing?

From experience, what are the pros and cons of getting your license. Thank you all!

Russell Brazil · Answer

If you plan on selling other people's houses you can charge for that with a license.

If you are only selling your own houses, there is no benefit...but there is substantially higher liability.

Bob S. · Answer

No zero need waste of time and money

JD Martin · Answer

Exactly what I was thinking of posting. Aside from disclosures, which I think can sometimes hinder a purchase or a sale, it's a lot harder to play dumb as a seller when you are a licensed professional.

You really don't need a RE license if you're flipping a couple of houses a year. If you're going to go whole hog with several dozen a year as a business, it would probably make sense to have your own brokerage.

Chris Bounds · Answer

Having a real estate license is NOT required to be a successful house flipper, but it helps a lot!

The biggest ways IMO are MLS data, multiple solutions for sellers (off market cash deal or listing), ability to rep. yourself on your own deals (saving on commission).

Commission savings adds up fast when you're doing multiple deals a year.

That being said, there is cost to having a license so if you're only doing a couple deals a year then it might not make as much sense.

Scott Allen · Answer

@Harley Kendall

1. Not necessarily - you can network with wholesalers and investor friendly agents to help you find deals, your learning curve will just be knowing how to evaluate the deals and if they can make sense for flipping or having to hold afterwards.

2. You have to disclose your licensed when you're buying a property personally but I wouldn't say that's a turnoff to sellers. It just needs to be disclosed. A pro is sometimes you can apply your commission to your deals when buying as well as save a little when you're selling.

A good instagram account to follow to give you an idea of the lifestyle of the vast majority of agents that are not investor friendly agents is @thebrokeagent - https://www.instagram.com/thebrokeagent/

Kevin Sobilo · Answer

@Harley Kendall, I agree with most of what @Jonathan Greene aid with one exception.

I suspect whether a part time agent sticks with it is HIGHLY market dependent. In my market the vast majority of agents are part time. I would guesstimate only maybe 30% of agents actually try to make a living at it.

However, the rate of agents who drop out is probably VERY high EVERYWHERE in general. I suspect 90% of those who take the classes to become an agent are not active within 2 years. Many never bother to even get their licenses.

A couple additional pros and cons:

1. Pro: Being an active agent helps you keep learning, gaining experience, and also staying motivated. You can't put a price on things that keep you motivated!

2. Pro: You can gain contacts with all sorts of people through your real estate agent work. Contractors, investors, lenders, etc.

3. Con: You need to be careful about how you conduct yourself when investing. For example, you need to disclose your status as a licensed agent.

4. Con: Also with how you conduct yourself, you need to communicate clearly so as to never get someone confused as to whether you are talking to them as an investor or an agent.

5. Con: Some investing activities may not be compatible with being an agent. For example, I believe many brokerages would prohibit their agents from wholesaling. This issue may be moot in some places as some states are making wholesaling a licensed activity so that ONLY agents/brokers will be allowed to do it.

6. Pro: In addition to MLS access your brokerage might provide access to other resources such as detailed online assessment data not available free to the public.

Jonathan Greene · Answer

It's really about two things:

1. Are you planning on using your license to sell houses or help friends and family buy houses? If not, it seems pretty silly to get your license.

2. Are you interested in getting MLS access and access to look at all of the vacant properties first as an investor who has a license? If yes, this is a smart way.

There are variables in the middle, but 99 percent of part-time agents don't make it and drop their license within a couple years or just pay the fees and do nothing. Most full-time agents will be thinking about other jobs this year as well.

Should I get my license?

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