Pros and cons of having a real estate license
Member since 2018 · 15 posts · 5 votes
Pros and cons of having a real estate license
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Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votesfor me personally I cant see how anyone that is going to do any volume in their local area in the fix and flip end of things can do this without a license.
1. real estate fee's can equal profit.. yo save those you instantly double your profits.
2. instant access to MLS and the all important lock box key codes.. no waiting on anyone to view a prop.
3. get lower up front purchase price EVERYTIME by discounting purchase price by the amount of the BAC commish.
4. Uber networking this is were real estate is done.. with other professionals in the industry..
now depending on market not all brokers allow you to do your own deals.. you need to find one.. bigger metros easily have those smaller little areas may not.
and for those that say it cost too much that's just BS its a few grand a year.. and if you cant afford that for your business then your business is not profitable anyway.
25 Replies
- Realtor · WV · Member since 2018 · 454 posts · 310 votes7y
This topic comes up a lot. It can be helpful to get your real estate license as it makes looking at properties easier. It can also hurt as you are giving up the expertise that can be gained by using an outside agent. The one thing I would say is don't let it hold you up from investing. Too many newer investors think they should be licensed and then they spend all their time and energy in getting licensed, which really has nothing to do with investing at all, so they are working on something that doesn't help them reach their goals. Focus on investing and when you are doing so much business that it almost becomes necessary to be licensed, then do it. If you do it before hand, you are just adding an unnecessary step in your investing process.
Good Luck! Aaron
- 7yJay HinrichsBusiness MemberReal Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
for me personally I cant see how anyone that is going to do any volume in their local area in the fix and flip end of things can do this without a license.
1. real estate fee's can equal profit.. yo save those you instantly double your profits.
2. instant access to MLS and the all important lock box key codes.. no waiting on anyone to view a prop.
3. get lower up front purchase price EVERYTIME by discounting purchase price by the amount of the BAC commish.
4. Uber networking this is were real estate is done.. with other professionals in the industry..
now depending on market not all brokers allow you to do your own deals.. you need to find one.. bigger metros easily have those smaller little areas may not.
and for those that say it cost too much that's just BS its a few grand a year.. and if you cant afford that for your business then your business is not profitable anyway.
- Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes7y
Originally posted by @Jay Hinrichs:
and for those that say it cost too much that's just BS its a few grand a year.. and if you cant afford that for your business then your business is not profitable anyway.
This is one of the rare times I disagree with you. For people running a business, I do agree, they should probably get a license. But the vast vast majority though of people on BP are not doing enough business to justify a license. (Heck the vast majority of licensed agents arent doing enough business to justify having a license, lol).
I think it makes sense if you are doing 4-5 units per year or plus. So few on here are doing that much. Even my bread and butter consistent investors I work with just do 1-2 per year.
Then you have all these "investors" running around the marketplace who think they know what they are doing because they have a license making huge mistakes. (The same goes for the agents doing just a couple deals a year). I just read on these forums of this agent/investor who wasnt experienced and got hit with wire fraud and wired all his funds out of the country mid transaction because he wasnt familiar that his wiring instructions he received were fake.
District Invest Group545 Reviews - 7yJay HinrichsBusiness MemberReal Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
Originally posted by @Russell Brazil:
Originally posted by @Jay Hinrichs:
and for those that say it cost too much that's just BS its a few grand a year.. and if you cant afford that for your business then your business is not profitable anyway.
This is one of the rare times I disagree with you. For people running a business, I do agree, they should probably get a license. But the vast vast majority though of people on BP are not doing enough business to justify a license. (Heck the vast majority of licensed agents arent doing enough business to justify having a license, lol).
I think it makes sense if you are doing 4-5 units per year or plus. So few on here are doing that much. Even my bread and butter consistent investors I work with just do 1-2 per year.
Then you have all these "investors" running around the marketplace who think they know what they are doing because they have a license making huge mistakes. (The same goes for the agents doing just a couple deals a year). I just read on these forums of this agent/investor who wasnt experienced and got hit with wire fraud and wired all his funds out of the country mid transaction because he wasnt familiar that his wiring instructions he received were fak
Yes Russell I was going to edit to say that one should have the license if its there business to flip houses IE 5 to 10 year or more.. certainly not if your doing 1 every 6 to 9 months that agree with totally.. but for any type of volume I think its almost mandatory to control yo
- 7yJay HinrichsBusiness MemberReal Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
@Russell Brazil on the wire fraud which we know is rampant and agents are a big target.
I was just selling one of my new construction that went pending this week in Charleston ( :) )
and there is now an addendum right from the South Carolina board that is a form that you have to acknowledge just like a home a sellers disclosure.. that identifies wire fraud how to protect your self buyer seller and brokers all have to sign it.
we need that In all jurisdictions..
ONe off house flippers your right they don't need to get a license.. volume players I just cant see doing business without it
- Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes7y
Originally posted by @Jay Hinrichs:
@Russell Brazil on the wire fraud which we know is rampant and agents are a big target.
I was just selling one of my new construction that went pending this week in Charleston ( :) )
and there is now an addendum right from the South Carolina board that is a form that you have to acknowledge just like a home a sellers disclosure.. that identifies wire fraud how to protect your self buyer seller and brokers all have to sign it.
we need that In all jurisdictions..
ONe off house flippers your right they don't need to get a license.. volume players I just cant see doing business without it
We have a company addendum on it Wire Fraud. But even with the addendum, the client needs to be educated on it. They need to understand what to look for. Its perhaps the most important thing agents should be doing right now, but so many are clueless.
District Invest Group545 Reviews - 7yJay HinrichsBusiness MemberReal Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
Originally posted by @Russell Brazil:
Originally posted by @Jay Hinrichs:
@Russell Brazil on the wire fraud which we know is rampant and agents are a big target.
I was just selling one of my new construction that went pending this week in Charleston ( :) )
and there is now an addendum right from the South Carolina board that is a form that you have to acknowledge just like a home a sellers disclosure.. that identifies wire fraud how to protect your self buyer seller and brokers all have to sign it.
we need that In all jurisdictions..
ONe off house flippers your right they don't need to get a license.. volume players I just cant see doing business without it
We have a company addendum on it Wire Fraud. But even with the addendum, the client needs to be educated on it. They need to understand what to look for. Its perhaps the most important thing agents should be doing right now, but so many are clueless.
its coming full circle Russell.. I closed on my 89 lot project in Oregon Thursday it was 7.4 million cash.. I flew up from Vegas to go to my bank and pull a cashiers check and then hand walk it to the title company and hand deliver it.. I have not been in person to a closing in years.. we always remote close and wire funds.. I was just not going to take one Iota of a chance of that large of sum of money going missing on my watch.
- Las Vegas, NV · Member since 2018 · 405 posts · 474 votes7y
The key is VOLUME. How many transactions will you realistically do per year? If you’re brand new, unless you have the funds to do at least 5 LOCAL deals right out of the gate, it does not make sense to go through the effort and expense of getting licensed yet. If you’re doing at least 5 LOCAL deals a year then it may make sense to be licensed.
Also keep in mind, being licensed opens you up to much more scrutiny with the real estate regulators in your state. Inexperienced licensees make more mistakes, which can be costly. Even doing 5 transactions a year doesn’t provide you with that much experience, to really know what you’re doing as a licensee. A mistake can be costly.
If you’re new, use a good realtor who knows what they’re doing, to help you at first. Then when you have more experience and are doing more volume, consider getting licensed.
- Flipper · Fort Myers, FL · Member since 2017 · 182 posts · 98 votes7y
From my personal experiences. There are pro and cons for getting the licenses. I have done more than 2 millions of transaction volume flips. I was kind of giving away 60k-120k commission when I sold them with an agent. And I lost quit a bit of deals because i didn't have the acesss to the MLS for the accurate comps that is the big one. So I finally buckle up. And got my license recently. I think i am gonna have more than 4 millions sale on flips in coming year plus my family memeber's listing as well. And being an license agent actually get u more credibility. People trust me more in the transaction and I actually can equally talk to appraisal when there is issue with appraisal when I sell it. Appraiser actually take my word more seriously just because I am an license agent. The down side is that when I actually go to appointment. I have to tell the seller exactly how much the house is worth lost out quit a bit of deal .
- @Kevin Dong Sounds like the license will definitely benefit you overall. Just wondering you mentioned you have to tell the seller ( or prospective seller) what their home is worth . I haven’t heard of this before . I know you do have to disclose that you are a licensed agent and making it clear that you are not representing them . Is there anywhere it is written you have to tell the homeowner what a home is worth ? Is this a Florida specific rule ?
- Flipper · Fort Myers, FL · Member since 2017 · 182 posts · 98 votes7yYup. It is Florida's rule. I don't know anywhere else. But I think it is for everywhere. As a license holder , when seller ask you about how much their house is worth. You have to act professional and honesty.give them the correct information. That's one of the rule you have to disclose what u know . That's the downside. But if seller never ask u. U don't have to bring it up. But there are lots of seller will
- 7yJay HinrichsBusiness MemberReal Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
Originally posted by @Joseph M.:
@Kevin DongSounds like the license will definitely benefit you overall. Just wondering you mentioned you have to tell the seller ( or prospective seller) what their home is worth . I haven’t heard of this before . I know you do have to disclose that you are a licensed agent and making it clear that you are not representing them .
Is there anywhere it is written you have to tell the homeowner what a home is worth ? Is this a Florida specific rule ?
this tenant of real estate law is virtually nationwide.. does not matter if your licensed or not. you cant tell a seller their house is only worth 20k when you know or with minimal research its obviously worth 120k.. thats called unconscionable profiteering.. I know wholesalers that have been sued on this one as well as agents.. agents just lose their license.. wholesaler just get sued.. and dont have a license to lose.
I have been buying distressed assets for 40 some years.. and been a broker the whole time.. But the majority of what we buy is on auctioin sites court house steps and MLS so its what ever we can negotiate there is no duty to seller for establishing a value.
I mean look at net worth realty and that other realty company that just ties up MLS listings then adds a premium to those..
So as an agent/investor your not buying pretty houses. your buying wrecks so you can justify lower price points quite easily.
but if your telling a seller there 100k house is only worth 20k and needs no work.. i dont care if your licesned or not a trier of fact is going to unwind that deal as unconscionable profit. IF the seller makes a stink about it..
- @Kevin Dong Maybe in that case, you could get the listing and at least a commission on the sale? I understand the situation you were referring to i.e. the seller not knowing what the house is worth, however, I would think that the majority of folks selling to flippers and wholesalers KNOW their house is worth more, but just don't want to go through the hassle of listing it, having strangers going inside for showings, performing repairs, buyers DEMANDING that ludicrous/fictitious items be repaired, getting hit with reductions because of the inspection report, getting low ball appraisal so now you have to reduce the price, fake buyers, fake financing approval, having to pay thousands in closing costs because buyers are cash strapped, etc. When I am selling a house and need to fast because I have a lot of deals pending, I will just discount it and give a "no haggle" price. I usually do that when I am selling to other investors or if I sell FSBO. I know that I am getting less than market value but I don't have to deal with all of the BS I just described. The last few houses I acquired, I just decided to throw them into the rental portfolio to avoid some of the hassles in selling them on the retail side.
- Flipper · Fort Myers, FL · Member since 2017 · 182 posts · 98 votes7y
@Jay Hinrichs An unlicensed individual has the right to tell seller that they don’t wanna disclose what they think the value of the property is. And there is nothing wrong with it. In some appointment. I usually just tell the seller. Hey. I have my own set of value for the property. And I don’t wanna tell u. But this is how much I wanna pay for the property it is your decision to sell me with this price or not. But as an licensee. You have to tell him exactly what the fair market price is no matter what.
I used to buy auction and distress property in mls. But since auction goes online and too much money on the market. People are overbid on auction . Spread are really thin right now. There is basically no deal at all in MLS even for distress properties. They list at the price where the end buyer will basically break even when they fix it. And there are still people pay for it. I don't know how they do it. So now. Most of the deal are off market. That's 95% of where my deal come from.
- Flipper · Fort Myers, FL · Member since 2017 · 182 posts · 98 votes7y
@David S. this could
Be a option. But I am not that type of investor. I don’t really like to deal with buy and sell for other people. lol. And yes. Most of the seller decides to sell off market know they are gonna get less money and they know they are trading the equity for time and less problem. But they don’t know exactly how much. Most of the appointment I have gone to. I am honest with seller. I tell him exactly that I am gonna buy and make or lose money on the deal. That is the business I am running. They understand. But if I tell him I am gonna make 40k-50k on my way out. What is the seller gonna do. Hell no. Lol. That’s The difference. When they don’t know the number. They are fine. A broad idea of I am making money VS exact number of how much I am making money is completely different
- ARRT, RT(R) / Rental Property Investor · Newport Beach, CA · Member since 2017 · 360 posts · 242 votes7y
Good thread. I agree. There are pros and cons to obtaining a real estate license, I had mine in my early 20s and worked for a couple developers, selling new homes. I let my license lapse many years ago, but now I am in the process of getting it again. I believe, for a few solid reasons.
I will save the commish on the purchase, I love the access to the MLS, able to look at properties, and I am sure other benefits. I will write all my studies off as well. I am going through "Real Estate Express" online, and the prices are unbelievable. RE Principles, RE practice, and the elective, RE Aspects of Law, all for, wait for it.... $59.40! Killer price! It was actually a Thanksgiving 40% off sale. :)
Normally the courses are $100.00 for the 3 classes for the California RE license. $100.00 is still killer.
I will stay in the profession of Radiology, but I'm pretty excited to get my California RE license again!
Best of profits! $$$
Daniel F. Harb, ARRT, RT(R)
- @Jay Hinrichs Thanks Jay , that makes sense . I imagine many more people these days have a pretty good idea of what their home is worth with all of the data available to the public , but I’m sure there are still many lawsuits as well . I was thinking in terms of homes that need work like you mentioned versus move in ready type homes . That is one benefit to buying at auctions and courthouse steps , not having to worry about this type of situation and potential lawsuits .
- @Dakota Ochoa I really think that is a case by case decision. I went through the course and actually decided not to do it. As mentioned in this thread, if you are purchasing MLS properties, you can definitely get a head start on the average investor. I could see it helping you when you sell too. You can visit every MLS property in the neighborhood without bothering an agent to do this non-financial activity. For me, I knew that I did not have the time to participate in the broker's office required activities, having to do continuing education every year, and maintaining all other requirements of having the license. Also, I do not participate in buying off of the MLS as there are a ton of wannabe and fake investors just overpaying for properties making it a break even or a loss proposition. Off market is where the real deals are found. I do think the disclosure requirements of being an agent is a little heavy too. However, it is also a numbers game. So if you are buying and selling maybe 8 to 10 houses or more a year, then it would be a cost savings to have either you, a spouse, or business partner with a license. I have seen a couple work in the business where one of them is licensed and the other one is NOT. In this way, agent heavy requirements on the purchase can be bypassed by having the non-agent do them. I have even seen the non-agent in the relationship do the FSBO so that they did not have to pay the agent's broker a commission. There are many different ways to operate with or without the license.
- Real Estate Agent · Southington, CT · Member since 2008 · 5k+ posts · 3k+ votes7y
There are no downsides to getting your license as an investor. If anything it will open up more doors literally and figuratively for you and your real estate business.
- 7yJay HinrichsBusiness MemberReal Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
Originally posted by @David S.:
@Dakota Ochoa I really think that is a case by case decision. I went through the course and actually decided not to do it. As mentioned in this thread, if you are purchasing MLS properties, you can definitely get a head start on the average investor. I could see it helping you when you sell too. You can visit every MLS property in the neighborhood without bothering an agent to do this non-financial activity. For me, I knew that I did not have the time to participate in the broker's office required activities, having to do continuing education every year, and maintaining all other requirements of having the license. Also, I do not participate in buying off of the MLS as there are a ton of wannabe and fake investors just overpaying for properties making it a break even or a loss proposition. Off market is where the real deals are found. I do think the disclosure requirements of being an agent is a little heavy too. However, it is also a numbers game. So if you are buying and selling maybe 8 to 10 houses or more a year, then it would be a cost savings to have either you, a spouse, or business partner with a license. I have seen a couple work in the business where one of them is licensed and the other one is NOT. In this way, agent heavy requirements on the purchase can be bypassed by having the non-agent do them. I have even seen the non-agent in the relationship do the FSBO so that they did not have to pay the agent's broker a commission. There are many different ways to operate with or without the license.much of this depends on what market you work in.. and your volume.. for a volume rehabber who is selling retail in a west coast market for instance Like ours in Portlandia were your average sales price is 500k.. that's a 10 t o 14k savings on each and every flip you do and when you buy depending on how you source you save those dollars going into it.. margins are razor thin.. many times commissions on these higher end homes exceed the profit of the flipper taking all the risk. If your in low value asset land say 50 to 150k homes and your only doing a few a year then I get that for sure.
People possess more licenses than the essentials. My CPA has broker, 700,800 FP licenses, NLMS, State insurance, state lender. But he focuses on accounting..... The licenses are as good as a piece of paper until you apply it.
- Yuma, AZ · Member since 2015 · 140 posts · 137 votes7y@Dakota Ochoa do you want to be a real estate agent or a RE Investor? If you flip a lot of properties agents licences will let you keep half the agent fees. Nothing wrong with agents license but I work for myself. Not others.
- Investor · Chesterfield, SC · Member since 2016 · 38 posts · 8 votes7y
Over all I think it is a Pro to have a real estate license because you get the first sight of all deals and can act on them in order to move forward with many different advantages.
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