Obtaining real estate license as an investor

9 Replies

As a beginning real estate investor, is it a smart decision to obtain a real estate license? I'm aware if he educational benefits it will provide, what other benefits will it provide?

Welcome to BP! This question gets asked daily here on the forums. Unless you want to be a wholesaler as your main business, then you should strongly consider getting licensed. 

If you decide to get your lic. It is helpful because you can have access to MLS. I am a broker and have been a broker for many years. I would not give it up however I would not get it again. Just remember to be honest and disclose, disclose, disclose. Good Luck.

If you think having a real estate license will give you the educational benefit for an investor, you might be wrong. I've just listened to BiggerPocket Podcast #153, they briefly talked about how most real estate agents does not know how to work with investors.  

Furthermore, an investor friend who has a real estate license told me that not having a license can be beneficial for RE Investor because you can "lie" to the seller.

Once you have a real estate agent license, you have to follow their rules. Such as, you must give a seller a true value of the CMA. It is not easy for you to tell someone that their house worth $150K but you only want to pay them $100K.

I just noticed you are from Texas.  I can tell you in Texas Donny is correct.  If you are an agent and you tell someone their house is worth $100,000 and you buy it and immediately flip for $150,000 you should expect them to take you to court and get the other $50,000 from you.

It can also required you to give out "Information About Brokerage Services" to many people you talk to about real estate.  Many brokers actually require that they keep the signed copies of those forms.

Originally posted by @Donny Widjaja :

If you think having a real estate license will give you the educational benefit for an investor, you might be wrong. I've just listened to BiggerPocket Podcast #153, they briefly talked about how most real estate agents does not know how to work with investors.  

Furthermore, an investor friend who has a real estate license told me that not having a license can be beneficial for RE Investor because you can "lie" to the seller.

Once you have a real estate agent license, you have to follow their rules. Such as, you must give a seller a true value of the CMA. It is not easy for you to tell someone that their house worth $150K but you only want to pay them $100K.

 Why should you have to tell the seller any price at all?

If a seller has a house listed for $150k, surely a buyer can't get in trouble for putting in a lowball offer of $100k, even if that buyer is a real estate agent.

Now if you're arguing that you should be able to say "I've done an in-depth CMA, and it says that your home is only worth $100k," then yeah, you have a point. That's just fraud.

I just don't see where you have to tell the seller anything at all. 

Hi @Jack M. ,

Unfortunately, I can't give any further explanation regarding that comment from my friend because I don't have a real estate license, and it was just a casual chat.  

my point here is basically, you don't need a real estate license to be a good real estate investor.

These are a few BiggerPocket blogs to end the discussion:

Hi @Zebedee Carey

Welcome to BP.

I would recommend it as a viable option. I do not believe that being able to "lie" to people is somehow an advantage. Being able to tell a 80 year old lady that her house is worth 100K , buying it and selling it for 150K the next day, is even an option for anyone in a reputable business.

You can easily tell that same little old lady your house in this condition is worth 150K, for me to "buy it within 10 days, I'd have to be in at around 100K". "But since I am also a realtor I can put it on the MLS for you and we can shoot for something closer to the 150K but I have to get a commission of 6% that I will split with the buying agent and it may take a while longer". One gives her a choice to decide what fits her needs best, the other just lets you fit yours only.

It is not required by any means, but it does give you other options and contacts you would never have otherwise. Think of many wholesalers who are looking for a cash buyers list all the time. As an agent you have a built in one, if the deal is good (the owner is aware of all the details) and you put that same deal up on the MLS it will fly off the shelf just due to the investors that have access themselves or an agent with access.

Just my thoughts and good luck!

Obtaining your license is a valuable learning tool for an investor but it does open you up to additional liabilities. As an agent/investor, you are held to higher standards with regards to disclosures. Additionally, you have to be very cautious in how you represent yourself to others in a deal.
I am licensed and actively invest and flip properties. Some would say that I am overly cautious in my approach to deals, but I always air on the side of caution to make sure that nobody has the ability to question my ethics.
My suggestion, if you are new to investing, find an investor friendly agent that you can trust, and start there. I'm located in the Cypress area and would be happy to chat sometime if you would like.

Originally posted by @Donny Widjaja :

If you think having a real estate license will give you the educational benefit for an investor, you might be wrong. I've just listened to BiggerPocket Podcast #153, they briefly talked about how most real estate agents does not know how to work with investors.  

Furthermore, an investor friend who has a real estate license told me that not having a license can be beneficial for RE Investor because you can "lie" to the seller.

Once you have a real estate agent license, you have to follow their rules. Such as, you must give a seller a true value of the CMA. It is not easy for you to tell someone that their house worth $150K but you only want to pay them $100K.

 Hey Donny,

As a "newly" licensed agent here in Texas, and been working with investors in Texas for over 3 years, you tone concerns me a bit.  I would like to respectfully disagree with you. I'm not perfect, but I would never condone "lying" to anyone to get a deal done, ever. That's not a way to build a business.

Furthermore, in the state of Texas, we are absolutely NOT "required" to give any seller a "true value CMA" at all. A CMA is just an opinion (legally), unless we're licensed appraisers. Which I am not. IF I decide to enter into a representation agreement, and list a property for a seller, then I am required by law to represent their best financial interest for that transaction (property). This means doing everything legal and ethical within my knowledge and skills to sell the property in the way that best suits the seller. It's my fiduciary duty, legally. Listing a house for someone, and then convincing that seller to take MY lowball, under-market offer, when there would most likely be better offers out there...or not marketing the property in all the ways I know how, so it doesn't sell, and they feel a need to sell to me....unethical and most likely illegal if it goes to a TREC hearing or court. I could lose my license over that.

However, if my goal was to BUY a property under market value from a perspective seller, I would not LIST that property.  That would be a conflict of interest, unethical, and quite possibly illegal depending on how TREC interpreted my "intent". As long as I disclose that I'm  a licensed agent, and am not trying to "List" their house, but instead I want to "buy" their house for my own purposes, I'm in the clear.  It's usually that simple.  

Anyone who has a problem with disclosure has bigger issues than losing deals because they're licensed.

When I want to offer on a property, I will let them know I'm an agent, but I would like to make them a direct offer on their property.  If we're not in the same ballpark, but it's a good candidate for a listing, then I will offer to list it for them.  It has not been a negative experience yet.  

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