I am a general contractor in Minnesota and am looking into getting my real estate license. What are the thoughts out there taking on both disciplines? Do you stick to what you know and trust the agents already out there? Or do you use your own talents and pick up the extra fees? I'm relatively new in this game but all the properties I've invested in have been found my wife on the mls. Would be interested to see how other people feel about this.
I think it would depend on your volume. Between fees and continuing ed., you might end up losing more than gaining. Another thought that I have would be more liability as an agent, if you are buying and selling your own properties. You would have to disclose that you are a licensed agent, and you might find that people think you are getting the better deal because you are the agent. In my opinion, just the additional hours of continuing ed would be a no go.
@Patrick Vos I work full-time as a GC in the Twin Cities (based out of Minnetonka) and hold both my Residential Real Estate Broker license and Residential Building Contractor license. If you're even somewhat active in the purchasing/selling space, I highly recommend you obtain your Real Estate license for the following reasons:
- CE credit often overlaps and counts toward both licenses. In the event that it doesn't, a few extra hours each year is worth the direct market access a license provides.
- Knowing your market is key - what better way to learn it than to have real-time access to all current sales, pending transactions, etc? I've also found that some (certainly not all) agents are either overly busy or lazy, and don't provide real time information promptly. This makes it difficult to really get up and running knowledge-wise. It's also easy to feel guilty bugging agents with tons of beginner questions when those requests won't necessarily turn into income on their end (this also pushes your requests to the bottom of the priority list).
- As others have stated, total cost to maintain your license annually is ~$2,000 worst case, depending on your brokerage setup, etc. If you're in need of tips for low cost brokerages, please feel free to message me. In addition to over 30 business-related transactions, I've completed 3 personal residence transactions. My savings from the personal transactions alone have recouped the cost of my license for 10+ years. I also find that I typically help at least one friend/family member with a transaction each year (which will cover the maintenance costs of my license indefinitely, moving forward).
- Yes, there is increased liability; however, if you take earning your license seriously, it doesn't take much to understand what must be disclosed, how to disclose it, etc. I've never found disclosing my licenses when selling a property as a disadvantage. I also don't cut corners when remodeling either for myself or clients, and I document things very well. As such, I'm not concerned about lawsuits, etc.
- You're able to go straight to the source. I'm used to dealing with all clients directly, so there is no way I could deal with a middle-man in negotiations, etc. I did that recently for an out of town purchase, and I strongly prefer to lead my own charge, so to speak. On both sales of my past personal residences, the homes were on the market for 30+ days. After that amount of exposure, my following up and discussions with showing agents lead to multiple offer situations on both homes, netting me more on each sale.
Ultimately, it comes down to how you run your business, your follow-through, etc. Some people prefer to delegate agent duties, but I've found huge advantages to having both licenses. I hope the above information is helpful. Feel free to reach out directly if you'd like to discuss things a bit more. I'm always up for networking!
@Patrick Vos - I would think if you are already finding your properties then maybe try to buy directly with the listing agent and see if you can get a deal on it by the seller not paying two agents. When selling have you tried/thought about doing a for sale by owner site? This can be a good way to save a ton on fees without going through the additional hours of work and ongoing education. That being said usually people sell homes for less without an agent so you'll have to trust your own sales ability. I would think this is a good first step to decide if you think it would be worth it, maybe you'll hate the entire negotiation process and decide you want to outsource it.
I'm not an attorney or agent so this is just an outsiders opinion.
@Patrick Vos , I don't think its a bad idea at all!
I disagree with @Amber Gonion about low volume agents (in part because I am one). I believe there are just as many agents (on a percentage basis) who make their living as agents who are incompetent as there are part timers who are. I do think though that you should take it seriously and work to be a good agent. Many times, you are representing other people in what is likely the largest financial undertaking of their lives.
I think my yearly costs are $1200 or so which is maybe the commission representing one side of an average sale here. So, the costs aren't prohibitive.
Some of the pros include:
1. Access to MLS data and statistics. Pulling data on sold properties is useful. The information on past listings and sales is as useful as active sales.
2. You're real estate office may provide services that you can use such as electronic access to assessment records or even to pull copies of deeds.
3. You will stay current on trends in the market, financing, etc.
4. You will come in contact with other investors, tradespeople, code enforcement, etc. All these things help to keep you current in what it going on in your market.
5. You will be aware of current inventory and possibly have off market deals come to you.
6. It will help keep you active and motivated which cannot have a value put on it!
I wouldn’t get a RE license as a GC since I would them be a real estate professional and couldn’t get long term capital gains