Choosing a broker to hang license

General Real Estate Investing
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Choosing a broker to hang license

Alan L.
San Diego, CA · Member since 2011 · 10 posts · 3 votes

Hi!

I recently passed the salesperson exam and was wondering if anyone has advice on choosing a broker to hang my license with. I'm currently aiming to flip properties in CA and I really want to save money on paying the realtor commissions. I also want to be able to use their MLS access so I can look at properties on my own time. So my questions are the following:

1) What are the pros and cons of joining brokers who charge a fee for each listing I want to put on MLS?

2) How exactly would it work for someone like myself to flip a deal as a licensed investor? (if someone could explain this process to me or provide me some article that would be extrememly helpful.)

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Joel OwensBusiness Member
Moderator
Real Estate Broker · Canton, GA · Member since 2010 · 15k+ posts · 11k+ votes
14y

Well I actually disagree to a point on there is not strategy that is or is not allowed if licensed.

There might be deals that are structured legally but not seen as ethically and if you belong to NAR that could be a problem.Also real estate commissions usually hold licensees to a higher standard as we have been trained on contracts and also must use full disclosure.

An unlicensed investor can claim ignorance on a bunch of things related to buying and selling properties.

Alan you say you want to flip but do not speak of any experience.If you want to hang a license and have zero experience that is a headache for a per transaction broker and a bunch of liability.

I have just reduced down the number of agents I have because they take away from me doing deals and are a huge headache.

There needs to be a better reason to be an agent than to only just save on commission.

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  • Steve S.
    Hollis , NH · Member since 2012 · 16 posts · 3 votes
    14y

    Great post. I was interested in getting the same license and was going to ask the exact same question you beat me to it!!

    1Reply
  • Chris Calabrese
    Residential Real Estate Agent · Mt. Pleasant, SC · Member since 2010 · 257 posts · 130 votes
    14y

    1 - If you got your license just to save on your own projects, you need to find a broker who doesn't charge a lot of monthly fees or overhead. Since you won't be acting as a full-time agent, it would be a waste to pay desk fees, etc. Almost every agent in my company is part-time or an investor, so my broker's business model is set up based on that. These are usually the smaller firms. You should also interview brokers and make sure they're flexible with you being creative with commissions, and if they will charge you a flat fee for listings instead of a %.

    2 - It will work the same as if you're not licensed, but you must disclose your licensed status to all buyers and sellers, and if you also become a Realtor, you will have to abide by the NAR code of ethics. As long as you are an honest, ethical investor, I don't think it will affect you at all.

    1Reply
  • Eric M.
    Flipper/Rehabber · Louisville, KY · Member since 2008 · 1k+ posts · 1k+ votes
    14y

    Chris,
    Your #2 point is interesting. Can you give me an example of a type of negotiating strategy or tactic that would be allowed if you weren't a Realtor but not allowed if your were one?

    Also becoming a licensed RE Agent is not the same as a Realtor. Not all agents are Realtors and so I assume are not covered by NAR ethics rules.
    Would your advice be the same if you were not a Realtor but just an agent?

    Thanks

    0Reply
  • Danny Day
    Developer · Houston, TX · Member since 2008 · 488 posts · 121 votes
    14y

    Eric, there is no strategy that is / is not allowed. All you must do is disclose that you're a licensed agent. In the Houston MLS we have an area for Owner/Agent disclosure.. I write it in private agent remarks in the MLS, and I write it in the contract as well. Therefore its disclosed in 3 spots, one verified in writing.

    Not sure why you would not want to abide by NAR rules. If you're conducting business ethically, you won't have a problem.

    Good luck

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  • Joel OwensBusiness Member
    Moderator
    Real Estate Broker · Canton, GA · Member since 2010 · 15k+ posts · 11k+ votes
    14y

    Well I actually disagree to a point on there is not strategy that is or is not allowed if licensed.

    There might be deals that are structured legally but not seen as ethically and if you belong to NAR that could be a problem.Also real estate commissions usually hold licensees to a higher standard as we have been trained on contracts and also must use full disclosure.

    An unlicensed investor can claim ignorance on a bunch of things related to buying and selling properties.

    Alan you say you want to flip but do not speak of any experience.If you want to hang a license and have zero experience that is a headache for a per transaction broker and a bunch of liability.

    I have just reduced down the number of agents I have because they take away from me doing deals and are a huge headache.

    There needs to be a better reason to be an agent than to only just save on commission.

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  • Alan L.
    OP
    San Diego, CA · Member since 2011 · 10 posts · 3 votes
    14y

    Thanks Chris for your answer. I will most likely have to call several brokers first to see if they offer it. I'd like to join a well known brokerage firm rather than a small one so that I could possibly access some of their resources without paying for desk fee. I know Keller-Williams probably offers flat rate listings, but I will check with them later today.

    0Reply
  • Keith Lutz
    Real Estate Agent · Hackettstown, NJ · Member since 2011 · 206 posts · 62 votes
    14y

    Just an FYI, in most states to get access to the MLS, you have to join NAR which means being a REALTOR, where-as a real estate agent is a state thing. Both have ethics and standards, but NAR is more geared towards ethical treatment of other agents and clients (this is to protect the sharing of information on the MLS). Most major Brokerages require you to join NAR, so stick to the smaller firms.

    My old firm in NC, (had to join NAR) had a nice pay structure of $35 per month and $299 per closing (including E&O), and you keep 100%.

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  • Alan L.
    OP
    San Diego, CA · Member since 2011 · 10 posts · 3 votes
    14y

    Thank you for the advice Keith, where can I check if my state requires me to join the NAR in order to access the MLS? I will have the license for California, will it be neccessary if I'm operating in this state?

    @Joel - I don't have any experience in flipping yet, but it is my intent to do this part-time over the course of several years. I thought that it would be a good idea to get my license to gain access to MLS to do my research, see REO properties on my own time rather than hiring an agent, and save money on the realtor commissions. So it's not just to save commissions, I have other reasons for it too. I understand that there is liability for the broker in someone new to handling the transactions, would you recommend that I take a training course to familiarize myself with the process of buying/selling homes?

    Also I just called several brokers (branches near my home like Remax, Century 21 and ColdwellBankers) and none of them offered to do the flat fee listing on MLS. Many of them stated that they "gain nothing by just hanging my license" if I'm going to do the flat fee listing... Now I'm kind of confused..

    If I join a broker's firm, I'm only allowed to list my properties with them right? I can't seek out other flat fee listing services? I was hoping to find a brokerage firm that wouldn't take a large split of the commission when I purchase the property, and also allow me to pay a small fee per closing transaction. Have I misunderstood soemthing?

    0Reply
  • Jake Kucheck
    Residential Real Estate Agent · Costa Mesa, CA · Member since 2008 · 1k+ posts · 380 votes
    14y

    Alan,

    My company primarily buys at Trustee Sale auction, but also maintains an RE brokerage, and sometimes we list our properties through that brokerage. I hang my license here mainly for convenience, but also because they offer the type of structure I like (and it appears, you like), in the sense that there is a small per-transaction fee and that's it (no monthly, no overhead, etc). It also means that the investors in our various funds, whenever they need to do a personal transaction (for their primary residence, family, etc) are likely to go with us. The downside is that you don't have a big fancy office, but in my opinion, the days of big fancy RE offices meaning something to the client are over (especially for the way we operate).

    Is that similar to what you are looking for?

    1Reply
  • Alan L.
    OP
    San Diego, CA · Member since 2011 · 10 posts · 3 votes
    14y

    Jake,

    You pretty much described what I had in mind. I was just wondering how do I search for these type of brokerages that allows me to hang my license with them and allows investors to pay a small per-transaction fee. Thank you for putting it into simple terms, I kind of have trouble describing it as I am still new to so many things.

    0Reply
  • Ralph Taylor
    Investor · Tuscaloosa, AL · Member since 2010 · 26 posts · 18 votes
    14y

    Alan,
    A couple of points. First, the state does not control the relationship between NAR and MLS. You should contact your local Board of Realtors. They will tell you if NAR membership is necessary to access the MLS.
    Secondly, and most importantly, remember the broker is in business, and trying to increase his profits. He is not going to be favorably disposed to someone who is not making a contribution to his bottom line. Especially if you are going to need a large portion of his time for supervision. How does what you want to do benefit him?
    You have the basics of a real estate transaction when you took the license course. The details are going to have to come from the broker. No two brokers do things the same way. So it looks to me that you will have to interview brokers one at a time until you find one you can work comfortably with.

    0Reply
  • Joel OwensBusiness Member
    Moderator
    Real Estate Broker · Canton, GA · Member since 2010 · 15k+ posts · 11k+ votes
    14y

    Used to small per transaction companies would take on anyone.

    I did it as well years ago.What I found was rusty agents doing 1 deal a year where I had to do the whole transaction to make 300 bucks.They couldn't hack it full time so had to work another job and could never be reached.

    Then you have the expired agent licenses,lapse because of no child support payment,or student loans,IRS taxes,non payment of state license dues,not meeting education requirements etc.

    So the per transaction companies got smart.If you are a brand new agent they make the first say 3 to 5 transactions at 70/30 or 60/40 and then after that you get the 100%.This way the broker gets paid for holding your hand.

    We also do this requirement sometimes if the agent does not produce so many transactions a year before coming to us as they can be really rusty in the updated contracts and processing a transaction.

    A new agent is bad enough but a new agent that also wants to buy their first investment property is a double whammy as far as liability risk to errors and omissions policy and time you need to invest with them.

    I think finding one for split first then going to 100% might be more realistic for you.

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  • Joel OwensBusiness Member
    Moderator
    Real Estate Broker · Canton, GA · Member since 2010 · 15k+ posts · 11k+ votes
    14y

    Us head brokers have an ongoing joke circulating that agents want the world and want to pay nothing for it without putting the dues and time in.

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  • Jennifer Lee
    Real Estate Broker · Gibsonia, PA · Member since 2013 · 828 posts · 260 votes
    13y

    Thx for this thread

    Interviewing with brokers tomorrow.

    0Reply
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