What good is a salesperson's license?

Question

So I've been trying to decide on whether or not I should obtain a salesperson's license. I finally decided I should, and thus signed up for an online course. I'm a few hours in and I fear I may have just wasted my money.

My sole purpose for obtaining the license is to improve my own real estate business, not to sell any properties. Everywhere I read, I see all the benefits of receiving a "Real Estate License." Well here's the thing, a real estate license isn't an actual thing that anybody can obtain. Correct me if I'm wrong, but you can't go anywhere and apply for a real estate license. One can obtain a real estate salesperson's license or a broker's license. None of the posts explaining whether or not one should obtain a real estate license specifies which license they are referring to.

Would it be worth while for me to finish the course and obtain my salesperson's license? Would I still be able to obtain access to the MLS? I have no intention of becoming a licensed broker, as that requires four times the amount of courses and it simply wouldn't be worth while to me, seeing as how I just want access to the MLS. Would  I be able to do this without becoming a broker?

-Tristin

Angela Harding · Answer

I'm a licensed broker in Michigan and Ohio. Am pursing my license in Florida. Different states have different licensing requirements. I went straight for my Broker's license because I had a lot of experience in real estate and didn't need a broker to help me or take educational classes through them. Most states require a certain amount of transactions or years of experience as a salesperson before they can qualify for a broker's license. In Michigan, I qualified with experience as a loan originator for 10 years so I did not need to get my sales license first. In Ohio, my Michigan Broker's license qualified me for a Broker's license without a sales license.

In my opinion you can never go wrong with a sales license if you are going to invest in real estate. It will only become a problem if you don't actually do any transactions and you end up paying fees and taking continuing education courses. If your going to get the license, use it to your advantage.

The first advantage is your represent yourself on your deals. You get commission on houses you buy. Second is, you are now self-employed and there are great tax advantages that you can write off under your license. Talk to a CPA on those benefits in your state. Picking your broker to put your license under is very important if you are doing this mainly for investment purposes. There are always broker's like myself that only hang other investor licenses and don't charge desk fees, and only charge small fees when investors purchase a house for themselves. They have to get paid something because they carry the insurance and handle the paperwork for compliance. If you can't find a broker like me then look for a company that only takes so much a year but doesn't charge you if you don't sell anything and/or that has a good educational program. Keller Williams is my favorite for new people.

The other benefits are that you can provide services for other investors if you are just doing a few deals a year and get paid for it. Just don't get into managing other peoples properties unless your broker is ok with it and/or you have good experience. It's not a very rosy business and has a lot of liability with it. Helping to lease other investors home is a great way to make some steady money with your license as you get started.

A couple other benefits I like is for example, when I bought the home I'm living in I had to put down $5,000 and my commissions were $2,500. The purchase of my property with a license paid half my down payment. The other one is when I sell houses in my program that I own, I still charge myself a realtor fee so it reduces the capital gains I have to pay after expenses. The funds still come to me but I pay 15% self employment tax instead of 35% capital gains. (After my itemized expenses.)

So get your license but make sure you are ready to have it pay for itself.

Angela

Russell Brazil · Answer

I think there are 2 scenarios where having a license is beneficial. If you want to actually do real estate sales, or you are doing more than 5 transactions a year.  If you are doing 4 or less, I just dont think it is worth the time, cost and increased government oversight to make having your license worth it.

Josh McCullough · Answer

Tristin, as a newbie, I'd recommend you finish the course.  Getting educated is never a waste of time, and maybe by the time you're finished, you'll be interested in trying your hand as an agent.  Your profile says you don't want a 9-5 job, but want to be involved in real estate.  So....you could sell real estate, make money, and then invest in real estate.

Account Closed · Answer

I agree with Josh. Finish the course, it will set you apart from those that don't have the license. You may become a broker or even an owner one day, the road to investing splits and turns and the more access you have to material, sales, deals the better. Keep in touch, look for deals

Brenda Lyons · Answer

Hello Angel

I'm in real estate class going for my license, it there any way I can meet with you? ☺ PLEASE

Angela Harding · Answer

There are legal restrictions and responsibility whether you have a license or not. Your better to have a broker that can help you and the education. If you practice good real estate, the legal end of it doesn't matter because you are doing things the way they should be done. Disclosing that I have a license and that I own most of the houses I sell has no impact on my business except makes me more creditable. Yes you can be successful without one, but the MLS is a major player in knowing your market and selling your houses. Better to take advantage of it!

Jeff B. · Answer

"Would I still be able to obtain access to the MLS?".  IMO, this is a poor reason for obtaining the agent license.  Are you aware that having the license imposes legal restrictions upon you, requires ongoing Professional Education units and you need to disclose your license in every transaction in the future.

MLS is not a major contributor to REI success.

David Moore · Answer

@Tristin Lysogorski

I hope to offer a different perspective on this.  The primary reason to get a RE license, in my opinion, is to save time.  Time is the real factor in real estate investing.  If I have to call my RE agent to go see a hot property, and work with their schedule, I might miss a great deal.  If I can see the property as a RE agent, and get my offer in fast, that's a win.

But there are other factors.  You have to maintain your license, and you have to disclose to private parties that you are a real estate agent, especially if you do marketing.  Some potential sellers avoid RE agents like the plague.  I got my  4 plex because the seller wanted to avoid RE agents, and their large commissions.

There may be tax consequences.  Getting a commission on properties you acquire may likely make you a real estate professional according to the IRS (I'm not an accountant...check with a CPA).    And MLS access costs money.

I get all the MLS listings I need from my RE agent, who himself is a BP member and an investor as well.  When I find a property I want to acquire from marketing, I call him up, and ask him to facilitate the contract for a small fee.  For me, the real deals are just not on the MLS.  For me, I'd rather have someone else keep up with their training.

But finding a competent Realtor is a real struggle.  And writing your own contracts can be a huge plus.  So like all things in RE investing, it depends.

Benjamin Haberman · Answer

Tristin,

Remember that when you have your license you are then getting commission on most investment deals you are pursuing. That means you are technically getting the properties for cheaper! It's an added bonus. The MLS is a powerful tool too. Learn it. Study it. Repeat.

Good luck.

Tristin Lysogorski · Answer

Hey all

Thanks for the replies everyone! Since posting this, I've decided to go ahead and move forward with the course and am hearing the end of the course. All I have left to do is to take the final licensing test.

What good is a salesperson's license?

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