Would I benefit from getting my Real Estate License?
Investor · Middlesex, NJ · Member since 2020 · 45 posts · 21 votes
Would I benefit from getting my Real Estate License?
Most Popular Reply
New to Real Estate · NYC · Member since 2020 · 21 posts · 17 votes
5yI am on the same road, from everything I can tell, get a license is absolutely beneficial if for nothing else but access to MLS.
73 Replies
- Real Estate Agent · Upper Marlboro, MD · Member since 2015 · 16 posts · 14 votes5y
Great thread and discussion. Love the Responses by @Tara S. and @Dennis Soto
Like Tara, my main reason for getting my license, 20 years ago, was for access to possible investment properties and to gain a better understanding of what happens behind the curtain with agents, brokers and banks they work with. That lead me to way more deals and relationships leading to more JV's and opportunities. When not leading with a scarcity mindset, you begin to see the value of others moving mountains for you. What's that mean? While you are counting 1-6% a deal, an investor friendly Realtor, on your team will find you more deals and negotiate those deals to a place that that 1%-6% should no longer be in question. A good agent will make you money with saving you time, negotiating better terms and market your renovated product. In my market I get an average 4% more than then market on well renovated properties. Don't trip over dollars counting pennies.
Not mentioned is this thread is the added liability you have as a license agent. Mr. Investor with license, you now have a code of ethics that guide your every move. Although, most have this code built in, know, there are times you will have to slow down and question your fiduciary responsibility to the client and what the state will deem you should have done as a licensee of the state. Licensees first are to protect the consumer. Licensed investors must act with more integrity and disclose disclose disclose. Note, if you do not, there is such thing as Real Estate Jail. I know many, now unlicensed Investors who got more than just a slap on the wrist.
As for the Broker, if you do choose to get your license, you should vet the broker and let them know your intensions. All brokerages are not created the same even when under the same brand. My office is one of the few Keller Williams in the nation with an investor division. As Co-Chair, I have spelled out in detail how to invest and work with investors with out losing your your license and show you how to write your deals so not to give away all your profit to broker fees.
What I didn't know when I got my license that I now know. If you choose to actually do real estate at a high level, you can personally fund your investment business and reach your investment goals much quicker.
- Real Estate Broker · Portland, OR · Member since 2019 · 4k+ posts · 2k+ votes5y
"Think your question is if a RE license would help me find properties."
I guess, but MLS access is not magic.
You need a plan for marketing and contacting people. You have the time? Or do you want to pay a broker for that time?
What's worth more to you?
I like to think I understand the point of your question, but I'm stumbling over the mechanics: "...share the proceeds with you." I'm not sure how to legally do that, so your question is moot.
Meanwhile, asking a commission-based person to reduce their commission (it would have to be on a listing) doesn't truly make sense. Most people thinks it make sense because they are trying to equate it to a salary/wage based employment.
If you are doing that many deals, I would like ot think the Realtor is part of your team providing value in ways other than just submitting an offer or listing a property (which there is more work than just that anyway).
Also, what sort of deals are you doing? If you are just buying distressed properties (as you stated), there is actually more work for the Realtor for very little compensation since the price points are low.... I've had "clients" who wanted me to help them purchase really distressed properties (so lots more research and wanting me to check things for examle) for $50k to $100k that they told me later they would sell themselves for $300k or $400k plus. So... why am I even busting my *** for a "few hundred dollars" and they won't even give me the list side? Now, you are suggesting I somehow give him a discount? In this example, the two deals I would be averaging $200k a deal... In NJ that's low...
So, I get what you are saying, but agents aren't compensated by the hour. They can, not always, provide value. For investment deals they don't necessarily get compensated much because of the price points. And, I'm not sure how you were thinking of doing a volume reduction in fees legally.
Does that make sense?
Originally posted by @David M.:
I like to think I understand the point of your question, but I'm stumbling over the mechanics: "...share the proceeds with you." I'm not sure how to legally do that, so your question is moot.
Meanwhile, asking a commission-based person to reduce their commission (it would have to be on a listing) doesn't truly make sense. Most people thinks it make sense because they are trying to equate it to a salary/wage based employment.
If you are doing that many deals, I would like ot think the Realtor is part of your team providing value in ways other than just submitting an offer or listing a property (which there is more work than just that anyway).
Also, what sort of deals are you doing? If you are just buying distressed properties (as you stated), there is actually more work for the Realtor for very little compensation since the price points are low.... I've had "clients" who wanted me to help them purchase really distressed properties (so lots more research and wanting me to check things for examle) for $50k to $100k that they told me later they would sell themselves for $300k or $400k plus. So... why am I even busting my *** for a "few hundred dollars" and they won't even give me the list side? Now, you are suggesting I somehow give him a discount? In this example, the two deals I would be averaging $200k a deal... In NJ that's low...
So, I get what you are saying, but agents aren't compensated by the hour. They can, not always, provide value. For investment deals they don't necessarily get compensated much because of the price points. And, I'm not sure how you were thinking of doing a volume reduction in fees legally.
Does that make sense?
Absolutely does, and the point was to illicit your thoughts from the other side of the coin. I've thought about OP's idea to get my license, and I've thought about working with my realtor to reduce commissions to help sweeten the deal (although haven't asked, just a means of "ramping up" and making the investor's numbers work) and so your opinion is helpful.
My thinking is If I use the agent for low purchase and commit to using them again for a (hopefully) high sell...but I am buy-and-hold strictly at the moment, so my poor agent is only getting the low purchase. :(
- Investor · Middlesex, NJ · Member since 2020 · 45 posts · 21 votes5y
@Tara S. did you quit your day job cause you enjoyed being a realtor more than whatever you did prior or because of the benefits it brought to your investing? Would you say being a realtor opened doors and opportunities that would've been more difficult to obtain without the license, or do you feel you could have accomplished the same with a good realtor on your team? I recently lost my job due to COVID and was considering going realtor/investor fulltime that's why I ask.
@Justin Robert that's exactly my theory. The access to the MLS and the money I would save on commissions seem to outweigh the cost of maintaining the license. As you said, if I can do it in a part-time capacity and sell to family and friends as well as my own deals, the benefits would outweigh the cost as long as the broker is willing to keep me on.
@Jacob Lapp the way you described your scenario is exactly how I hope it would go for me. I'm sure there are differences between your situation in PA vs. New Jersey cost, regulations/guidelines though; or am I just over analyzing it?
@Frank Godfrey I have not considered the liabilities that come with being the realtor as I am not aware of what they consist of. However, I do appreciate the picture you've painted of the other ways I could benefit from utilizing the realtor's experience and time vs. trying to do it all myself.
https://www.biggerpockets.com/...
Since you seem to honestly want to learn about this, take a look at the above thread. OP did a nice one asking "the question" from an entirely different angle. We had some good discussion.
Back to your last point, I think I have may commented sort of on that in the above linked discussion. Yes, your "poor agent" is getting screwed, sort of. But, how do you work with your agent? In my case, I had a full time job where I ended up working 100+ hours a week including travel for 18 years. So, my agent was basically my property mgr helping coordinate or provide access for stuff. I was trained to "respect" the commission sales profession and think of these as accounts. When I quit my full time job and thus started investing full time myself and working as a agent full time, I told her that these accounts are always hers (unless she pisses me off....). Also, she has gotten dozens of transactions off me via my renters over the years (thats just "first degree of separation" and not counting repeat and referral business). In many ways, I've given her free advertising, or actually paying her to advertise her... Yes, we've become good friends. But, as a business relationship, find me an "independent" (e.g. not working in an office for a builder or something) residential agent who gets dozens of transactions from one client?
So, if handled "correctly" on both sides, it can still be a huge win-win situation. Again, agents never seem to be included as a potential team member by investors. I'm not saying it will be easy to find such an agent and build/maintain that rapport. I actively looked for an agent for two years...
You might say that this would entitle me to a reduced rate when it comes time to sell... Sure, it would be nice. But, its a commission based profession. One is paying for more than just the ability to get your property listed on the MLS. This is one reason why all the bargain brokerage concepts keep failing. Yes, investors are more savy, at least the experienced ones. So, they don't need an agent to walk them through a deal or advise as a deal goes sideways. I don't know if this makes sense... Maybe think of it like insurance or like using an attorney (since in Northern NJ we use attornies). Most of the time my attorney is just "doing the transaction" especially since I've already done so many I don't need much advice. But, those few times something thorny comes up, the attorney is there and we already have a rapport.
@Dennis Soto I quit my job because I already had my license and I didn’t want it to go to waste & it def opened up a lot . Being a realtor is awesome if you enjoy selling and people. I wouldn’t recommend getting your license simply for your investing but if you want to do it as your day job absolutely it will help your investing career it’s just not worth having JUST to invest but being a realtor that invests I save money when I sell, I make money when I buy, if I see a house while I’m driving around I can just go inside I don’t have to wait for an agent to meet me, it also brings me off market deals when clients come to me looking to sell etc. Another very important thing if your going to get your license is choosing a broker. I was at c21 the top broker in my area and it was awful. I switched to a broker who also invests, sells, wholesales and is apart of the lifestyle and was willing to teach me & mentor me and it changed my career so your broker is VERY important ! (Also some charge crazy fees and franchise fees etc.
- Rental Property Investor · Souderton, PA · Member since 2020 · 124 posts · 106 votes5y
@Dennis Soto
I think you might be over analyzing lol I’m sure there are slight differences but overall would be very similar numbers/outcome
That's pretty good if eXp in PA is $85 a month. I know its a national brokerage and never checked if it was different State to State. In NJ, I think it was more like $3500 annually total after your max out your fees (since they are pro-rated).
- Nashville, TN · Member since 2020 · 17 posts · 8 votes5y
Hi @Dennis Soto
I'm sure you'll get hundreds of responses, but I figured I would add my two cents.
I've been investing in Real Estate for about 8 years, and have been a licensed Realtor for almost 1 year. I invested in Real Estate on the side while I was working at a full-time Career. Now, I am pursuing Real Estate Sales (Realtor) as my full time occupation, and still investing in real estate.
In my experience, the cost (emotional, financial, and time-commitment) is not worth getting your license unless you are planning on making it a full-time or semi-full time part of your business plan. A great agent will likely earn you as much or more than their commission costs. And, it isn't possible to become a great agent doing a couple deals a year.
If your motivation for getting your license is simply not to pay an agent commission on a couple or a few deals a year, I think your time and energy would be better spent applying yourself to the parts of your business you are interested in.
In short, the opportunity cost will probably be greater than the money (if any) you save.
All the best to you, sir! - Rental Property Investor · Souderton, PA · Member since 2020 · 124 posts · 106 votes5y
@David M.
I think the $85 a month is the same nationally. Since I am not planning to be a capping agent in the near future the fees associated with capping weren’t as important to me. But compared to KW it was significantly less anyways.
The cost benefit of PA vs NJ is really the same. It all boils down to what are your annual fees/dues and your commission split with your broker. eXp is a newer brokerage following a different model of the 80/20 split. however, the max potential fees is about $3.5k annually. I say "potential" because some of the fees, such as the E&O premium, is kinda of 'pay as you go.' So, for your first bit of commission, its not really a 80/20 split because they are taking some fees out you. So, if you don't do any deals in a year you might be liable for say $2.75k the year (don't quote me since I never bothered to calculate).
If you want to get an inkling for the added liabilities that goes with being a Realtor, scan through the Realtor Code of Ethics. Yes, its pretty dry, but it does not practical examples you can read if you download the long version. Basically, you are held to a higher standard so the CoE applies all the time, even on your own transactions. You always have to disclose, everything. Not just the condition of your property, but even that you are a Realtor when you meet somebody including if its an off-market deal. Our contracts even have a paragraph where you have to specifically declare if you, the buyer, are a licensed Realtor.
- 5yDarren SagerPro MemberInvestor · Tampa, FL · Member since 2013 · 2k+ posts · 1k+ votes
@Jacob Lapp, @David M., eXp is $85 a month nationally and not different state to state outside of one MLS (per se) which is the Real Estate Board of NY (REBNY) and then it's $165 a month. There's no $3500 annual total to eXp here in NJ. Perhaps if you add up your board fees and MLS fees, E&O, you may hit that number but I doubt it.
Also we're allowed 3 personal transactions per year, not one, paying a small transaction fee if you haven't capped (hitting $80k in GCI). IF you have capped you'd still only pay the small transaction fee regardless.
I just checked really quick. Yeah, becareful of the "sales pitch." The $85/mo is their "tech fee." You sort of get nickled and dimed for every other fee that is per transaction. So, while you might be getting 80/20 split, your first bunch of transactions are getting "taxed" until you max out some of the fees (the transaction and review fees I think never go away). Anyway, do your own homework. Good luck.
Thanks. Yeah, I looked at eXp earlier this year. Personally, I think its a nice sales pitch of $85/mo tech fee. But, when I added everything up it came to $3.5k annually. Maybe my math was wrong. But, thats what I came up with when I considered everything I needed to hold my license active including maxing out the transaction fees with eXp. That's what they would be taking from me. That's just how I was trying to compare assuming I had some actual production, and not just doing one or two transactions a year.
- Rental Property Investor · Vineland, NJ · Member since 2019 · 9 posts · 3 votes5y
@David M.
Getting your license is key to being a successful investor
- Rental Property Investor · Souderton, PA · Member since 2020 · 124 posts · 106 votes5y
@Michael Breisch
They now made the technology fee mandatory which brings it to $85 for new agents
- Rental Property Investor · Souderton, PA · Member since 2020 · 124 posts · 106 votes5y
@Michael Breisch
Thats what I thought. I’m not sure where the other guy came up with $3500 a year
- 5yPeter MckernanBusiness MemberResidential Real Estate Agent · Irvine, CA · Member since 2013 · 2k+ posts · 1k+ votes
@Dennis Soto Yes, that is a great start and would put you in a great position to not only learn some stuff along the way to your flipping/buy and hold venture; it will give you more experience and give you the ability to sell some properties for others you know to add more income to you and increase your cashflow for more deals! All the possibilities could open up even more once licensed!
The McKernan Group4.957 Reviews - Member since 2020 · 14 posts · 15 votes5y
Does being a licensed agent align with your long term goals? Do you love hustling on the weekends? Would you be using it to supplement your income around your flips or just to eliminate commissions on your flips? If you're just trying to eliminate commission on your flips, many seasoned flippers I've talked to feel there's too much liability in holding a license. And if you're just trying to eliminate cost in your deals, go be an inspector or a general contractor while you're at it. But that doesn't make sense because you don't have time to learn all that right? If you feel you've got to go down that path make sure you pick one that truly aligns with your long term goals and realize it never hurts to pay for these services if its allowing more time for you to focus on those goals.
- 5yWale LawalBusiness MemberReal Estate Broker · Houston | Dallas | Austin, TX · Member since 2018 · 5k+ posts · 2k+ votes
@Dennis Soto
You have received great advise here already and I won't regurgitate what has been said.
Get your Real Estate License ONLY and ONLY if you are Flipping a minimum of 2 houses a month. Anything less than that will not save you money but cost you money.
Identify and work with an Investor-Realtor and negotiate the commission you are willing to pay. Most will do 1.5 - 2.0% of the sales price if you are bringing all your deals to them for MLS listing.
It cost average of $3500 per year (excluding marketing) to keep your RE license.
Goodluck
NETWORTH BUILDERS5236 Reviews - 5yTerrance ClarkPro MemberReal Estate Professional · Hickory, NC · Member since 2016 · 172 posts · 47 votes
@Dennis Soto
I would say being an agent means a commitment to disclosure which to me isn’t a bad thing...
Will you have to be sharp with your business to clearly articulate absolutely but I believe that’s what being a professional is about.
I also believe being an agent allows you to offer more solutions allowing you more ways to get paid... if you only wholesale you can only wholesale.
I am with EXP Realty we do not wholesale but we do have a platform. Where we introduce motivated sellers to iBuyers. It doesn’t bet nearly what a wholesale did would but it helps me hit my cap and I use it to buy stock so my trade off is bigger returns on the back end!
- Real Estate Agent · Miami, FL · Member since 2018 · 3 posts · 0 votes5y
@Dennis Soto
Yes getting your license in your case is a great idea. Definitely more pros than cons. One of the biggest is as you mentioned, you’ll be acting as your own agent and saving on all the commission fees. Hope this helps. Good luck my friend. 👍🏾
- Flipper/Rehabber · Pensacola, FL · Member since 2016 · 4 posts · 1 vote5y
@David M. i made that move and got my licences and sign on with a broker, my mane reason was to get access to the mls so i could run comps accurately and trend neighborhoods so after all the monthly fees for access to mls, lock box app, legal fees, national association of realtors fees and continue education to keep the license it not at all worth it, plus it's a hurdel trying to keep everything separate plus most realtor dont even wont to understand the concept of wholesaleing and flipping contracts there going to.swear.your breaking the law or doing something unethical, if i knew what I know now no i wouldn't do it, just get the Homesnap app, EZ Data web sight, i did sell a couple homes to my friends and family what a nightmare dont do any business with friends or family
Join the conversationCreate a free account to reply, vote on answers and follow this thread.