Having a Real Estate License: Does that make you an Agent?
Member since 2013 · 67 posts · 4 votes
I was wondering about something for a little while now. When you get your salesperson license you will then have access to the MLS, and you need to find a broker to "sponsor" you. So, does this technically make you an agent? I was thinking, if I could start off working as an agent listing and marketing properties for sellers and then bringing them buyers and collecting a 3%-6% commission for each transaction it would be a great way for me to raise capital for investing. Would it be possible to be an agent and an investor at the same time or is being an agent a full time job that would make it difficult to invest as well. Would appreciate it if anyone could answer my questions or give me advice on this matter. It's something I've really been thinking about.
Edited, two posts beat to it. Yes, you act as an agent individually under a broker or if you have a broker's licensee then you can have a company under the brokers company. You could have a company in your name to invest, but you better clear that with the broker and the state authority, depends on what that company is doing.
Terry, there are several options, being a licensee does not mean you're an agent until you enter into an agency relationship with a broker. Technically you represent the broker in providing representation to the public. A broker or agent does not need to be a Realtor, that is a professional organization but since the NAR sponsors the MLS, you may not get access, you'll find many commercial brokers are not Realtors.
Your broker, as a Realtor will be a member of the local board of Realtors and they govern the relationships between brokers, in doing so they set a co-brokerage fee to be divided for commissions, but each broker is free to set thier own fee structure, but, if a property is listed on the MLS as a condition to do so, that board may require a fee being split under the co-brokage agreements, but some may allow an exclusive listing without fees to others, which means others won't be showing or mentioning such a listing.
It's highly unlikely a broker would allow you to do only such exclusive listings trying to get 6% or full commission and there is also the split with the broker to hang your license under them. SInce they want sales (and listings that sell quickly) the broker is motivated to use the MLS on the co-brokerage agreement in that board area. If I were your broker, I wouldn't allow your scheme as it really hinders the owner in providing the best marketing path to get thier property sold.
You can be a Realtor or an agent under a broker and invest for yourself, you can read here on BP about thos issues and the requirements to disclose your being a licensee or agent.
As far as a way to earn, yes, being an agent probably has advantages over trying to go out on your own, especially with limited capital as an investor. There are brokers who provide additional training, they can generate leads and business for a new agent that an investor starting out just would not get. But, you'll be spliting commissions not hauling in full commissions on every deal but it is possible.
Study well! :)
Terry H.,
No the broker issues the 1099 in your SSN. you then receive a gross check, no taxes are taken out. You must make estimated payments to ensure you don't owe too much at the end of the year.
You will subtract you expenses from your income. Some items will be depreciated. You pay taxes on the net profit. You can also create your own retirement plan.
-Steven
Great information as I am working through the same thing :) Terry H. I am currently in the classes and should be up and running in June. We have also been investing in real estate for the past year doing some buy and holds and a couple flips. We put all of the inventments in an LLC which is in my husbands name. The broker I'm going with is a midwest company that allows me to buy/sell the first 3 properties a year without splitting the commission with the broker. After that it's a 50/50 split. According to them investing while I work as an agent won't be a problem. I just need to disclose my relation to the LLC on each transaction. Not sure if it matters but I'm only doing the agent part-time for now because I have another full time job. I hope to evenatually get out of the full time job and consentrate on being an agent and investing. Good luck!
Yeah, I'm looking to become an agent and replace my job, then once I have experience as an agent jump into investing. Jodi Melssen are you taking classes live or online?
Terry H. Due to having a day job and the classes being an hour and half away I took the 60hr prelicensure course online. Listing practices, buying practices and Ethics had to be taken live so I'm doing those as weekend classes. Almost finished, I have Ethics and the test left.
Jodi Melssen I'm in a similar situation. I was looking up classes online and they all seem to be quite a drive away, I'll continue looking though. Listing practice, buying practice and ethics would make 90 hours then right? Isn't only 60 hours required or is it 90?
Terry H. In Iowa the requirments are a 60hr prelicensure course plus the 12 hrs each for listing practices, buying practices and eithics. If you have any experiene buying/selling the online version shouldn't be to bad. It does require a lot of self motivation to get it done quickly. In Iowa you have up to 6 months to finish it so it would be easy to put it off. I'm currently a teacher and started the process in March so I could have everything completed when school gets out.
Okay. I'll have to check the requirements in my state then.
Terry
You seem like your still in what to do mode. Here are my suggestions or two cents worth based on being an investor for 58 years and a real estate agent/broker for 48 years.
Step one become an investor/wholesaler as of today so get busy, and as you learn that study for and get your agents license (here is where even agents are confused, they think the license gives them the right to deal with the public. It doesn't, only a broker has that right, the salespersons license gives them the right to be an agent for the broker not the public.
Now when you get your license find a broker that will give you the best deal. The training at most offices including the big names sucks so don't be sold on the training sales pitch, training is actually a do it yourself possibility. Eg, have a title or escrow question get the answers from the horses mouth, talk to a senior escrow officer. The same for other subjects. Try and find a team spirit attitude office with a cooperative and knowledgeable broker is ideal. Your goal at this point will be to find a "partner" in the office experienced and know-ledgeable but not overburdened who will be willing to split your business with you while you learn.
Terry H. you are getting a lot of great advice in this thread!
The only thing I will caution you on is several people are talking in absolutes when they talk about how the licence, brokerages, MLS and such work.
I have little doubt that they are totally on the money about their state's rules, however each state will be a little different, sometimes with differences in regions within the state and every broker will handle things a little different.
So eat up all this great info and use it help guide you, but don't assume it is absolute fact since your situation might be different.
You seem like your still in what to do mode. Here are my suggestions or two cents worth based on being an investor for 58 years and a real estate agent/broker for 48 years.
Step one become an investor/wholesaler as of today so get busy, and as you learn that study for and get your agents license (here is where even agents are confused, they think the license gives them the right to deal with the public. It doesn't, only a broker has that right, the salespersons license gives them the right to be an agent for the broker not the public.
Now when you get your license find a broker that will give you the best deal. The training at most offices including the big names sucks so don't be sold on the training sales pitch, training is actually a do it yourself possibility. Eg, have a title or escrow question get the answers from the horses mouth, talk to a senior escrow officer. The same for other subjects. Try and find a team spirit attitude office with a cooperative and knowledgeable broker is ideal. Your goal at this point will be to find a "partner" in the office experienced and know-ledgeable but not overburdened who will be willing to split your business with you while you learn.
Wow @Brian P 58 years, that is a lot of experience! You say I should start wholesaling but I hear that can be complicated for beginners, plus right now I'm just saving my money for my real estate education plus the start up costs that come with becoming an agent, thanks for the great advice though!
Brian P "Your goal at this point will be to find a "partner" in the office experienced and know-ledgeable but not overburdened who will be willing to split your business with you while you learn." I understand most of this, but I'm not clear on how to split your business - Can you elaborate?
@Terry H
Every thing you learn as a wholesaler is transferable to a career as an agent, everything, and a awful lot of it you would be stuck with learning after you got a license anyway. Also as my first broker always said a license just gives you the legal right to hunt but you will still need to learn how to hunt, or starve. Plus a few deals will provide you with the money to proceed. The last deal I did required I put up $10. If you find a deal I'm sure you can come up with $10 even if you have to panhandle for it.
@Andy M
To split business is easy. The simplest is just to sign an agreement that your business with buyers and sellers that you both work with and on together will be split for example 50-50 and the share each receives will be split with the broker as per their contract with the broker. I would have a simple little form you both sign each time that prospect such and such falls under your agreement so as to avoid arguments about whether it was it mine, yours, or ours.
Thanks Brian P.! Understand.