Investing and Being a Real Estate Agent

11 Replies

I am just getting into real estate investing, and will be purchasing my first property this year. I plan on using this property as a buy-and-hold, and "house hacking" it. In the future I would like to explore other avenues of investing. Becoming a realtor has crossed my mind as a way to generate more income while staying active with real estate, but I have heard that having a license limits what you can do as an investor. 

That being said, what are the restrictions a realtor has on types of investing they can personally do? Specifically, what types of investing (wholesaling, flipping, etc.) is a realtor forbidden from pursuing themselves? Is this an ethical issue, or are there laws in place against such actions? Do the laws vary by state, or are they imposed nationwide? 

Thank you for your reponses. 

@Carson Sweezy  

House hacking is a great reason to get your license!!  Go sign up now!!

Think of your license as a ~1.5% discount on any property you buy.  In the world of Buy and Hold a license is almost always a boon.

If you end up in another money making section of the RE world where it is a problem, you can always surrender it.  

BP is a great place to find reason why you might not want your license.  But to start out, it is a great thing to have.

@Carson Sweezy , I haven't run into an issue yet with having my license nor have I heard about anyone else. The key seems to be disclosure and CYA documents. 

I do like the fact of being able to write your own offers and get into houses on the MLS without having to constantly bombard someone else with phones calls and follow up emails if they've sent your offer in. In my experience it has been nothing but a plus so far. If you are only doing one deal now and then.. the licensing fees may not be worth it, but if you are buying several and doing multiple deals I would definitely recommend it. The costs of having your license don't stop at just completing the course, there are plenty of on going fees to factor in too.

Hope that helps!

Thank you Chris and Aaron for your responses. I have yet to see a disadvantage to having a real estate license besides the ongoing costs. It's true that the license can be surrendered, I suppose there isn't going to be a situation where someone who has once held a license would be discriminated against. 

Originally posted by @Carson Sweezy :

I am just getting into real estate investing... Becoming a realtor has crossed my mind as a way to generate more income while staying active with real estate, but I have heard that having a license limits what you can do as an investor. 

That being said, what are the restrictions a realtor has on types of investing they can personally do? Specifically, what types of investing (wholesaling, flipping, etc.) is a realtor forbidden from pursuing themselves? Is this an ethical issue, or are there laws in place against such actions? Do the laws vary by state, or are they imposed nationwide? 

Thank you for your reponses. 

 Great question @Carson! 

I recently wrote an article [REMOVED] In the article, I outline both the benefits, as well as some of the drawbacks of having your license

One of the obvious differences (I don't choose to think of them as disadvantages) is that you must disclose two separate things. First, you must disclose the fact that you are acting on your own behalf (NAR Code of Ethics Article 4), and Second, you must disclose the true value of the home, and not deceive or mislead the public in any way about it's value (Article 1). 

Aside from the fact that you wouldn't want to mislead anyone anyway, and you wouldn't have any problem telling someone you were an agent, there are tons of benefits.  

However, I will caution you.  Be very cautious when listening to those who are unlicensed try to tell you how to do certain things in your market.  Their methods are not necessarily always in line with the spirit of the Code of Ethics.  Our Rules, our Standards are higher.  

The law treats you differently (punishes you more severely) than that of the unlicensed.  In my humble opinion, it is an honor to be both a Realtor® and Investor.  You get the best of both worlds. 

Have a Powerful Sales Day! 

Karl just read your blog post, also read a few other posts including [REMOVED] Good stuff.

One question. You mention several times about disclosing true property value, I understand how this could be an ethical concern for wholesaling, but if I am buying a piece of property that is on the market, and can negotiate a deal down from the sales price, is this seen as unethical as an agent?


 Also, I am currently enrolled full time with college classes. Is the schooling for becoming a realtor something more in line with adding an additional 4 credit class, or is the work load more like a full time job?

Originally posted by @Carson Sweezy :

 Also, I am currently enrolled full time with college classes. Is the schooling for becoming a realtor something more in line with adding an additional 4 credit class, or is the work load more like a full time job?

 The course I took in MA was 2 weekends of 10 hour classes.  The test wasn't hard at all, but it is HIGHLY specific.  I.e. know the details of your state and federal codes.

The work load is light so it won't take a ton of time.  But dedicate a few hours each day/night to memorizing specifics for the test.  Once the test is over you can look up anything you need to.

Thanks for the input Aaron, I know the course requirements are similar for Virginia, but haven't heard specifics about the test. Seems like a great time to get my license while I'm already in schooling mode. 

Hi @Carson Sweezy ! I'm in (almost) the same boat - currently enrolled full-time for college and taking classes to qualify to sit for the broker exam. I'm not sure what the requirements are in Virgina, but at least in CA, I've been able to take all the required classes at the local community college. It's been very easy, just like adding another 4 unit class. My recommendation is not to let the time commitment hold you back - jump in, get it over with, and get your license. 

Good luck!

realtor, investor, flipper here.  I do find having multiple income streams to be very helpful and prosperous.  As an agent you are or should be very aware of values and day to day market conditions and changes. This of course helps. Plus can brainstorm with other agents you work with.

However it can be a challenge to balance ethics and what is in the spirit of the law and looking for a good deal for yourself.  I have encountered situations where I could have gotten a "steal" from my market knowledge, condition of home, etc.  BUT would be in serious hot water plus have to live with my own ethical standards and reputation, etc.   Instead I put on my Realtor hat and listed the property and worked my butt off to get the seller the best possible price and best possible terms...a fiduciary duty.

In one instance a seller in need interviewed me, and didn't hire me. Then the agent he did hire did a horrible job, was not being marketed during holidays, etc.  I swooped in and picked it up a few days before Christmas for a very good deal representing myself. Got paid the commission.  Fixed and flipped and made another $20,000 or so.  That I have no problem with at all and neither does the code of the profession.

If a seller has other representation, go for the best to represent YOU.

Other possible conflict of interest situation could be where you have a buyer actively looking for property and 123 Main Street meets their criteria.  I always show first, allow buyer to (quickly) decide if y or n.  If N, or some really stupid lowball offer, then I make my move.  Can be a bit of a gray area here, so be cautious.

Remember if there is a regular old Joe consumer with a legal issue confronting you as a professional Realtor....guess who will loose.

Play fair and honest and should be in good shape.

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