Cons of having a realtor license?

General Real Estate Investing
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Cons of having a realtor license?

Dylan Swanson
Residential Real Estate Agent · Minneapolis, MN · Member since 2014 · 61 posts · 15 votes

Hi all,

I'm considering getting my real estate agent license.  I think I'm aware of most of the pros, but I was wondering if I could get your feedback as to what might be the cons of being a realtor who also looks for off market deals (other than the upfront costs, continuing ed requirements, dues, and other costs).   

Thanks!

MODERATOR:  THE QUESTION IS ABOUT THE PROS AND CONS OF HAVING A LICENSE.  NOTHING ELSE.  FURTHER OFF TOPIC POSTS WILL BE REMOVED.

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Kimberly H.
Residential Real Estate Broker · Chicago Suburbs, IL · Member since 2013 · 1k+ posts · 594 votes
12y

I have mine.

Pros- Access to MLS and being able to see a property yourself without having to synch to someone else's schedule. Controlling exactly how your MLS listing appears.

Cons- Expense. MLS access is expensive, plus mandatory realtor board fees, continuing education time spent and fees...and the continuing education classes that are cheap are a total joke. You do have to disclose license status, although I've never had anyone that I've disclosed to care. But since you have your license you are held to a higher standard so make certain you know what your fair housing laws are.

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  • Eric M.
    Investor · Washington, Washington D.C. · Member since 2014 · 96 posts · 39 votes
    12y

    There are certain ethics requirements that you must comply with as a licensee that are not present as a non-licensee. In my states, for example, I have to disclose my status as a licensee no matter what I may be doing in real estate, where others would not have the same obligation.

    Also, to me, the continuing education requirements are a major hassle. I know different people have different views on this, but if you're a competent licensee, you're a competent licensee, whether you attend a mandatory class or not.

    1Reply
  • Kimberly H.
    Residential Real Estate Broker · Chicago Suburbs, IL · Member since 2013 · 1k+ posts · 594 votes
    12y

    I have mine.

    Pros- Access to MLS and being able to see a property yourself without having to synch to someone else's schedule. Controlling exactly how your MLS listing appears.

    Cons- Expense. MLS access is expensive, plus mandatory realtor board fees, continuing education time spent and fees...and the continuing education classes that are cheap are a total joke. You do have to disclose license status, although I've never had anyone that I've disclosed to care. But since you have your license you are held to a higher standard so make certain you know what your fair housing laws are.

    4Reply
  • Dylan Swanson
    OP
    Residential Real Estate Agent · Minneapolis, MN · Member since 2014 · 61 posts · 15 votes
    12y

    Thanks @Eric M. and @Kimberly H. I would definitely use the position as a secondary source of income (aside from just working my own deals), and I'm sure having your finger on the pulse of values, buyer preferences, neighborhood nuances, etc. is also a huge help.

    Do you guys feel you get better access to better deals from being an agent?

    Also, does anyone out there from Minnesota have any input on this?

    1Reply
  • Sam Hodgett
    Real Estate Investor · Minneapolis, MN · Member since 2014 · 35 posts · 35 votes
    12y

    Following.  I'm in the same boat, considering the same scenario.

    2Reply
  • Dell Schlabach
    Investor · Canton-Akron, OH · Member since 2012 · 917 posts · 477 votes
    12y

    @Kimberly H.  couldnt help but chuckle at your interpetation of the quality of real estate continuing education classes. 

    Had an email a couple days ago from the new realtor wife of a partner, she had just got out of continuing educating class, where the instructor said, HUD never does counter offers, we had been submittimg a bunch of bids to hud, and she had recieved two HUD counters the same week.

    Instructors information is a few years outdated. makes you wonder how current he is with the rest of his information. 

    1Reply
  • Greg H.Pro Member
    Moderator
    Broker/Flipper · Austin, TX · Member since 2013 · 4k+ posts · 4k+ votes
    12y

    @Dell Schlabach 

    Yes he is incorrect about HUD counters, but it is not a true counter in that even if you accept it is not reviewed until the next day so if a higher offer is received you will still lose the property.

    3Reply
  • Mark Ferguson
    Flipper/Rehabber · Greeley, CO · Member since 2013 · 2k+ posts · 1k+ votes
    12y

    As @Greg H. says its not really a counter, just an indication of what they would accept if they don't get a higher offer. 

    I took 12 hours of ce online today in about an hour. Lol

    I am an agent and investor and I think the pros blow the cons out of the water. Sure I have to disclose, but no one cares and it might give me more credibility. 

    3Reply
  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    12y

    @Mark Ferguson 

      You beat me I do each state that I am licensed in in less than 2 hours total. .just challenge the questions after 35 years at this its easy for me.. Maybe I can't click my mouse as quick as you.

    Why all these folks want to get into RE and not be licensed I will never know. I think the benefits far out weight the down side..

    the amount of deals I get yearly from fellow agents that know I am in the bizz far out weight any negative.

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  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    12y

    @Mark Ferguson 

      and then the accidental listing I get here in PDX.. for 300 to 500k or more because they are past clients and I make a 7 to 15k commish for just listing and maybe working 10 hours or less on the listing sure is nice... Pays for my vacations... And I am just trying to keep up with Mike McKenzie's travel schedule and I think I am just about there  Although he is spending a week on the ORegon coast and I am trying to get out of Oregon  LOL

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  • Dell Schlabach
    Investor · Canton-Akron, OH · Member since 2012 · 917 posts · 477 votes
    12y

    Interesting, so a HUD property is listed for 100,000, I offer 80,000, Hud sends an email proposing to sell the house to me for 90,000, and I have 24 hours to accept the offer.

    That is not a counter offer from HUD?

    0Reply
  • Mark Ferguson
    Flipper/Rehabber · Greeley, CO · Member since 2013 · 2k+ posts · 1k+ votes
    12y
    Originally posted by @Dell Schlabach:

    Interesting, so a HUD property is listed for 100,000, I offer 80,000, Hud sends an email proposing to sell the house to me for 90,000, and I have 24 hours to accept the offer.

    That is not a counter offer from HUD?

    No.  You don't have 24 hours to accept it. You can rebid at that price and if no one else bids higher they will accept your new bid. If someone bids higher they will accept that bid. 

    0Reply
  • Dell Schlabach
    Investor · Canton-Akron, OH · Member since 2012 · 917 posts · 477 votes
    12y

    @Mark Ferguson    Heres the email from the realtor, you are saying she just made up the 24 hour portion...?

    Hi Dell,

    I wanted to give you a quick update on the HUD offers you placed a while back. When they first counter offered they only allowed 24 hours for a response but they actually continued to send the same counter offer email. The property at 230 Gnau is still listed. They were asking 65,000 and you bid 40,000. They came back with a net to HUD of 52,000 and they recently sent me an email with an offer of 45,630 net to HUD. I took a class today that discussed HUD offers and the lady teaching the class told me that HUD never sends counter offers. Pretty funny since you've now received two of them on the same property.........

    0Reply
  • James Syed
    Real Estate Broker · Mount Olive, IL · Member since 2013 · 1k+ posts · 310 votes
    12y

    Welcome to BP.

    There are many more pro than cons. 

    Some of the cons are

    1. You will always have to disclose that your a broker even if you want to rent put your property for rent  not to mention during buying and selling.

    2. You could be sued for E&O.

    3. It will cost you about $1,500 a year to be a realtor / broker. 

    4. There are other guidelines that must be followed which will be beyond this post to cover all of them, however I tried to cover the main ones. 

    Hope it helps.

    2Reply
  • Mark Ferguson
    Flipper/Rehabber · Greeley, CO · Member since 2013 · 2k+ posts · 1k+ votes
    12y
    Originally posted by @Dell Schlabach:

    @Mark Ferguson    Heres the email from the realtor, you are saying she just made up the 24 hour portion...?

    Hi Dell,

    I wanted to give you a quick update on the HUD offers you placed a while back. When they first counter offered they only allowed 24 hours for a response but they actually continued to send the same counter offer email. The property at 230 Gnau is still listed. They were asking 65,000 and you bid 40,000. They came back with a net to HUD of 52,000 and they recently sent me an email with an offer of 45,630 net to HUD. I took a class today that discussed HUD offers and the lady teaching the class told me that HUD never sends counter offers. Pretty funny since you've now received two of them on the same property.........

    I'm a HUD listing broker. There's no where to sign and no way to accept that counter. You can only rebid at that amount.

    1Reply
  • Phil C.
    Queens, NY · Member since 2013 · 82 posts · 10 votes
    12y

    you'll pay about $700-$1000 annually on NAR and broker fees/membership fees which includes mls, desk fees, franchise fees, etc. Plus.the 22.5 ce courses every 2 yrs which can vary in the $200-500 depending on course. And finding a broker to sponsor, some have performance quotas and can release u if you dont produce.

    But most cons are the costs. I got mine in June and haven't made a dime yet  but I hope too soon otherwise im wasting my time and money

    2Reply
  • Greg H.Pro Member
    Moderator
    Broker/Flipper · Austin, TX · Member since 2013 · 4k+ posts · 4k+ votes
    12y

    @Dell Schlabach 

    No she didn't make it up but it is not s true counter in the sense we are accustomed to.  Even if you "accepted" the bid would be opened the next morning along with any others on the property.  So if another bid netted $45,631 they when even though you accepted the counter

    Keep in mind the number HUD sends is the net and not gross meaning Bid + Commissions + any closing costs.

    So by being a Broker, I can put my commission as zero and make my net higher.  For example:

    $100,000 bid - $6000 commissions = $94,000 net to Hud

    My Bid $97,001 - $3000 Commission( Listing Broker) = $94,001 net to HUD

    My bid wins :)    Become an agent !

    3Reply
  • Robert Leonard
    Investor · Lafayette/Baton Rouge, LA · Member since 2013 · 1k+ posts · 915 votes
    12y

    @Dylan Swanson 

    I'll just offer a different take on what appears to be the consensus con, taking CE courses.  The courses may or may not be lame, but whether they are or not, it's another networking opportunity.  Maybe I'm too new at this, but I still like going to CE courses at different venues and with different instructors ON PURPOSE.  I meet other investors and people in the business at these courses, so the content doesn't really matter to me.

    As far as if the cost - is holding a license really a cost or an investment? If I find one deal a year that I make more than the annual price tag of the license AND/ONLY because I have a license/MLS access, I can assess the value, walkthrough the property and submit an offer ahead of my competition, is that really a con? That's what my license does for me. It's like if I had to pay admission to get into the bank; If I have to pay $2 to get into the bank and leave with $20, I personally don't mind that, even if anyone calls it a con!

    3Reply
  • Sean Brooks
    Bear, DE · Member since 2014 · 178 posts · 65 votes
    12y
    @Dylan The cons are just what some people already explain. I don't view them as cons, view them for what they are. There expenses for doing business. The information available to you is incredible. Combine this with being able to assist others and your own deals. It's worth it!
    1Reply
  • Mark Beekman
    Investor · Phoenixville, PA · Member since 2008 · 257 posts · 18 votes
    12y

    It depends in what you're doing and I'm not sure how realistic it is, but what about tax consequences? Couldn't the IRS determine that anything you do real estate-wise to be "business activity" if your are a realtor?

    0Reply
  • Lisa Thoele
    Investor · Newberg, OR · Member since 2012 · 161 posts · 82 votes
    12y

    I think the pros far out weigh the cons - most of the cons have been mentioned already but I think one of the bigger cons would be in yellow letter type marketing...in Oregon you are supposed to disclose in every communication.  You also have to find a broker that will be flexible with your activity for example you may want to use non-standard forms.  I've found the big traditional franchises to not be investor friendly in the Portland market.  Good luck!

    1Reply
  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    12y

    @Lisa Thoele 

     Will the bigger brokers IE KW REM etc not allow you to direct solict even with RE disclosure? 

    PS for the record you were one of the best agents we ever worked with.. anyone that could corral MS Nancy was a star in our book

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  • Lisa Thoele
    Investor · Newberg, OR · Member since 2012 · 161 posts · 82 votes
    12y

    @Jay Hinrichs 

    Aw thanks so much Jay - you are a great builder - she got a great house.  I'm not sure how the big boys would handle the marketing but I know they would not allow me to use non-RMLS forms and they were super concerned about me doing too many personal transactions.  I have found Premiere Property Group to be a great fit - they allow me to do my thing as long as I stay with in the Real Estate Agency rules and Steve, my husband, can run his retail real estate business seemlessly with them.  Their fees are fair.  

    0Reply
  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    12y

    @Lisa Thoele 

     Its a fine line in the ultra competitive   west coast markets.

    When I speak at RIAs and other events in LA.. the first thing I ask is a show of hands from the audience who is a RE agent.. virtually every hand is raised.. then I ask Who is a Private lender and again nearly all the audience raises their hands.

    Its not quite that way here in Oregon.. but its still a very vibrant RE market.. And of course we are totally over looked for cash flow deals.

    Even though America for Rents came into our market and bought probably 500 SFR'[s

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  • Mark Creason
    Real Estate Lender and Broker · Dallas, TX · Member since 2013 · 966 posts · 500 votes
    12y

    Cons are definitely the fees, MLS, Continuing Education, licensing fees. I am licensed in 11 states and have to take about 250 hours of CE. At least I found a school that will allow for some duplication.

    Mark

    1Reply
  • Jay C.
    Seattle, WA · Member since 2014 · 308 posts · 170 votes
    12y

    In this day and age you need the license for nothing. With the internet you pretty much have full acsess to the MLS. Your free to sell any of your own properties. The better question is why do you want one and your answer should point you in the right direction

    0Reply
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