Real Estate License Pros vs Cons

3 Replies

Hello BP,

My name is Tony Santos and I am a wholesaler/flipper from Massachusetts. My partner and I currently started our business in October. We already have a wholesale deal and flip under our belts. We both just passed the real estate salesperson exam and my question is what are the pros and cons of working under a broker. A friendly disagreement occurred where we both should focus on growing our business and spend our limited time throughout the day on the business solely while one of our wives (also an agent) lists and sells the property for us while the commissions go right into our business account. Another thinks it's a good idea to work under a brokerage because of networking and finding deals through the MLS. BP is full of successful investors and I would love to get some opinions on here.
A. We both have full time jobs so we should focus our limited time on our business.
B. Working under a broker (as an independent contractor) is not that time consuming and the pros over-weight the cons.

Thanks!

If your wife is an agent she can send you every deal that comes across MLS. Realistically though, you aren't going to find your deals through MLS. If it's already there, it's likely been vetted by an agent that could have made a deal on his own before listing it. That's not to say there aren't deals on MLS but they are rare. I'm talking about wholesaling mainly and also flipping. The RE license is great (I have mine) but I don't really wholesale and I think there is the potential for you as a RE agent to create a conflict of interest as well as an ethics violation to make a deal with a seller to put their property under agreement for a lesser value than you can sell it for a profit. You will have to justify to him why as a licensed professional you are advising him that he should sell it for the lesser value. You must disclose you are licensed when you meet the homeowner for the first time. They may not care that you are giving them a quick deal and flipping it for more money but it wouldn't sit well with me if I was the Seller. Your wife acting as your agent separates you from the process. Maybe I'm way off but that's my thought. Maybe @Brian Ortins can chime in. He's an investor and a licensed agent here in MA. We just worked on a deal together. 

I agree with @Rob Beland that it is not ethical to be offering a lower price than the home can sell for on the open market. You have a great situation where you have an agent on your team where you directly benefit from the commissions generated on the buy side and save commissions on the sell side. I do not see a benefit or need to join a brokerage that may expect you to perform certain activities such as office hours and pay for desk/office fees. I joined an investor friendly brokerage and do benefit somewhat in terms of deal flow, but benefit mostly due to my construction background, as I get many rehabs via the firm. I would leverage your existing agent to scour the MLS for deals, and you can focus on off market deals as a NON AGENT.

I think if you hold a license and you're also going to be negotiating with private sellers to buy (not list) their property, it's important that you make it very clear to all parties in the transaction that you are acting as a principal in the transaction and that you are not working as a real estate broker representing anyone other than yourself in the transaction, even though you may hold a real estate license.

There's been quite a bit written on this topic here on BP, and there are definitely pros and cons to being licensed. Just operate on the up & up and be sure to disclose the fact that you're licensed.

Free eBook from BiggerPockets!

Ultimate Beginner's Guide Book Cover

Join BiggerPockets and get The Ultimate Beginner's Guide to Real Estate Investing for FREE - read by more than 100,000 people - AND get exclusive real estate investing tips, tricks and techniques delivered straight to your inbox twice weekly!

  • Actionable advice for getting started,
  • Discover the 10 Most Lucrative Real Estate Niches,
  • Learn how to get started with or without money,
  • Explore Real-Life Strategies for Building Wealth,
  • And a LOT more.

Lock We hate spam just as much as you

Join the Largest Real Estate Investing Community

Basic membership is free, forever.

By signing up, you indicate that you agree to the BiggerPockets Terms & Conditions.